Sole Founder/CEO of PostcardMania. Joy bootstrapped her business to $62 million in 2019 with only a phone, a computer and postcards.
It’s no secret that, in the wake of Covid-19, many small businesses are struggling to navigate a confusing landscape of governmental restrictions, staff and customer safety, and how to regain the momentum lost to shutdowns earlier this year.
If you listen to the news, you might think that all small businesses are on the verge of collapse. Yet at my company, where we service small businesses directly, we just had the best month of May in our entire 23-year history, and this summer is expected to set records as well. June was our second highest-ever month in our history. While our revenue took a big hit at the height of the pandemic, we’re back in the black and on pace to be up 10% over last year. I wrote about our rapid rebound just last month. So, surely there are plenty of small businesses out there still humming along.
With that in mind, I wanted to personally take the pulse of American small-business owners and find out how they handled the pandemic, especially with regards to marketing.
My own client database seemed like a great place to start, so we sent a survey to my own sampling of SMBs. While the sample size (126 respondents) isn’t large enough to be statistically significant, valuable insights can still be culled from their answers.
Here’s what they had to say:
The No. 1 Small Business Pandemic Priority: Adaptability
While there isn’t a textbook for coronavirus business management, one aspect is clear: Businesses need to be flexible to survive.
We asked businesses if they had to adapt to accommodate customers.
• 29% changed nothing and remained open.
• 58% pivoted in some fashion.
• 13% had to close.
This is where I anticipated small businesses would shine. With leaner business models, many can adapt quickly — but 58% still wowed me. Notable pivots among the responses included remote working/virtual consulting, setting up e-commerce solutions to maintain sales, streaming online classes and offering no-contact delivery.
These results also show what a difference two months can make to a small business.
At the height of the pandemic and mid-shutdown (early April), the U.S. Chamber of Commerce published its own small-business survey results, which painted a frankly dire picture. One in four respondents (out of nearly 500 respondents total) reported having to shut down temporarily, and 40% believed they’d need to shut down soon. Another 43% believed that, within six months, a permanent shutdown would be unavoidable.
Thankfully, the first round of PPP opened applications on April 3, the day the Chamber published their findings. Most statewide lockdowns began to ease by the end of May. And by May 4, 47% of PPP applications had been approved.
I surveyed my clients at the end of May and beginning of June — plenty of time to adapt and find a way to survive. By then, just over 40% of them had already received PPP funding, and 39% didn’t even apply for it.
Recession Marketing: Smart Investment Or Expensive Mistake?
When your revenue drops, the natural reaction is to first evaluate what went wrong and, second, find where you can cut back to recoup those losses.
Marketing is often one of the first contenders for the chopping block, with business owners usually falling into one of two camps: Cut marketing to save money or increase marketing to grab market share from those pulling back.
So, where did our respondents fall on that spectrum?
• During the pandemic, only a third of respondents (33%) cut back to some degree.
• The majority of respondents (52%) either maintained or increased their marketing efforts.
• Now that the country is largely reopened, 44% of respondents plan to continue their marketing push.
With most respondents sticking to their marketing, this could point to a faster small business recovery. Recession marketing research published in the Harvard Business Review found that “companies that injudiciously slash marketing spending often find that they later must spend far more than they saved in order to recover.”
Of course, not all businesses will be in the position to continue marketing, let alone increase those efforts. While marketing is undoubtedly important, it can’t take precedence over essential costs, like mortgages and payroll.
It boils down to this: If you have funding available, marketing is a vital investment in the overall health and longevity of your business — especially during an economic downturn.
Year-End Projections Are Bleak On Revenue But Rosy On Employment
For me, this is where the rubber meets the road. Would these businesses be losing money to the point of layoffs?
In terms of revenue, the results were realistic:
• 58% of respondents expect a 5% decrease in revenue by year’s end, with a quarter of respondents expecting to be down 25% or more.
• 13% expect to be up by 5% to 10%, while 12% expect to be up 11% to 15%, and 8% expect to be up 25% or more.
Despite this, staff count projections were surprisingly positive:
• Only 19% of respondents expect to end the year with fewer employees than they started the year with.
• Everyone else — 81% — expects staff counts to stay the same or increase even with revenue losses likely.
These results fall in line with a recent U.S. Chamber of Commerce study published in early June. They found that 55% of business owners anticipate rehiring most of their original staff by year’s end. In our survey, 62% of respondents expected to end 2020 with the same number of staff they employed at the start of the year.
If anyone ever asks why I love small-business owners so much, I’ll simply point to the above. Despite likely losing money this year, SMBs aren’t laying people off to compensate for those losses and turn a profit.
True to form, small-business owners are still about much more than just the bottom line. And that’s one thing, it seems, that will remain untouched by any pandemic or crisis.