COVID-19 has hit the smallest of small businesses, according to a new study that looks at the impact of the pandemic through the prism of bank deposits.
Intuit QuickBooks hired an economist to see how the the pandemic has affected small business finances across the country.
The economist, Susan Woodward, looked at the bank deposits of a million businesses, each with typically 10 or fewer employees, across all major sectors and industries.
Among his discoveries are:
- The biggest impact of the pandemic on small business revenues came in April 2020, when revenues fell 22% nationwide, equivalent to $ 4.6 billion for that month alone.
- Overall small business revenue fell 28% in Connecticut in April 2020.
- Revenue increased for 61% of industries during the pandemic after a largely sustained recovery since April 2020.
- The most successful companies over the past year are home improvement and real estate companies. Annual income for mortgage bankers has increased 30% from pre-pandemic levels, an average increase of $ 147,000 per business.
- Some of the hardest hit small businesses were in the entertainment industry. For example, annual bowling alleys were down 33% at the end of March 2021, an average drop of over $ 250,000 per business.
- Small businesses in high-density urban areas, particularly in states on the east and west coasts, have suffered a greater financial impact from the pandemic. The most affected areas are New York, in particular Brooklyn and San Francisco.
The study found encouraging news.
“Even some of the most affected companies have returned to pre-pandemic levels,” the study said.
“For example, at the end of March 2021, the monthly income of hairdressing studios was 13% higher than their pre-pandemic levels.
“This is a huge turnaround from the low point in April 2020, when their monthly revenues were 78% lower than before the pandemic, which equates to more than $ 11,000 per company for this. single month. “
The study found that the small businesses that suffered the biggest drop in revenue were oil and gas (down 20%), recreation (down 20%), local transportation (19%), films (15%), hotels and accommodation, (12%), education (11%) and museums and attractions (11%).
But some businesses and industries were able to increase their revenues during the pandemic.
These include financial and insurance services (up 14%), agricultural services (up 11%), fishing and hunting (11%), building and gardening materials. (10%), utilities (10%), forestry (8%) and crop manufacturing (8%).
The study also found that sustained recoveries across all industries began after the pandemic low point in April 2020.
“Fast forward to the end of March 2021 and all 10 US sectors were back above the monthly income benchmarks they set before the pandemic,” the study said.
He noted that in March 2021, monthly revenues in the construction industry had increased by 30%, those in retail by 22%, and those in manufacturing by 20%.
Despite earnings gains from many small business sectors, the study says small businesses still need help recovering.
“This is especially true for leisure, tourism and entertainment businesses, but also for retailers, bars and restaurants, among others,” the study notes.
It recommends expanding access to COVID-19 relief funds to more small businesses, securing government support for smaller businesses, and making it easier for small businesses to go digital.
“The goal here is to make small businesses more competitive and less vulnerable to future recessions,” Woodward wrote.
“This could be in partnership with the Small Business Development Center network and the SBA’s Women’s Business Center, for example.”