St. Louis Small Business Owner Dealing with Supply Interruptions, Lost Sales
The NFIB Research Center’s latest survey on the current impact of the COVID-19 outbreak on small business offers a stark contrast from the survey released 10 days ago. The magnitude of disruption now on the small business sector is profound.
Currently, 76% of small businesses are negatively impacted by the outbreak of the coronavirus, a dramatic escalation from just under one-quarter of small businesses reporting the same earlier this month. About 5% are positively impacted. These firms are likely experiencing stronger sales due to a sharp rise in demand for certain products, goods, and services. This will presumably ease in the coming weeks as consumers feel more secure about their personal supply levels.
One-in-five (20%) small businesses are not currently affected by the outbreak, but 77% of them anticipate that changing if the outbreak spreads to or spreads more broadly in their immediate area over the next 3 months. This marks a sharp departure from the earlier survey where 43% of small businesses anticipated being impacted if the virus spread. Just 4% do not believe they will be impacted if the outbreak escalates and 18% are not sure.
Of those businesses negatively impacted, 23% are experiencing supply chain disruptions, 54% slower sales, and 9% sick employees. The 9% of owners citing sick employees likely responded out of heightened concern and precautions with sick employees showing some signs of cold or flu-like symptoms, but not necessarily because they have employees who have tested positive for the virus.
“In Missouri, 80% of the total number of businesses have less than 10 employees. That’s close to 120,000 businesses. This new study highlights in a dramatic way just how many of those small businesses are going to be hurt by this unprecedented economic disruption,” said Brad Jones, NFIB State Director in Missouri.
In St. Louis, Jim Henderson is taking the disruption day by day. Fortunately, his small business, Dynamic Sales, has been deemed an “essential business,” so he can still deliver supplies to his customers. However, his supply channels have been impacted, which means a loss in sales. Henderson can’t get any disposable respirators because most of the manufacturers are in China. He also can’t get any hand sanitizer.
“I’ve been saying ‘oh, I can’t help you’ to a lot of people lately,” said Henderson. “Even some of my customers who are allowed to stay open have called and told me not to come by.”
Henderson is also waiting to see if he can deliver his products to other customers as they figure out if they are “essential.” Another hurdle he’s facing is that some of the plants where his small business manages inventories have restricted visitors, meaning his employees can’t get inside to take stock. As a result, Henderson don’t know if the plant is running out of a product until they are completely out, which means a lag time on when Henderson can get some product to his customers. Right now, Henderson hasn’t seen a huge financial setback, but he says that’s it’s only a matter of time. He’s focusing on resiliency.
“I’ve told my employees that we’re going to take advantage of this time. If we can’t deliver product to our customers, we’ll organize our warehouse or update technology: things that will make us more competitive after this is all over. The reality of the situation right now is that you can either sit at home or go do something and I choose to go do something.”
Almost all small business owners are taking some sort of action adjusting to their changing economic condition or to protect themselves from potential disruption. Just 6% of owners have not taken any action in response to the outbreak, a market departure from more than half (52%) not taking action two weeks ago.
The level of concern among small business owners about the coronavirus impacting their business has elevated significantly over the past two weeks. About 68% of small business owners are “very” concerned about its potential impact on their business compared to 16% in the earlier survey. Another 23% are somewhat concerned and 9% are slightly concerned. Just 1% are not at all concerned.
While many small businesses (47%) have not talked with their bank about financing needs, 30% are planning to do so soon. Another 13% have talked with their personal bank already, 9% with the SBA about their loan programs, and 1% with an online lender.
The vast majority of small businesses are now impacted by the COVID-19 outbreak and owners are taking the threat to their business seriously. Many owners have already sought out financial help and more are planning to do so in the near future. The outbreak will leave few, if any, owners unscathed. We know the economic impact will be immense, and now, the question is how long will it last and how quickly can the small business sector recover once on the other side. Small business owners are anxious to seek clarity to both questions.
This survey was conducted with a random sample of NFIB’s membership database of about 300,000 small business owners. The survey was conducted by email on March 20, 2020. NFIB collected 700 usable responses, all small employers with 1-360 employees.