The COVID-19 pandemic has been tragic on many accounts. Though the almost-600,000 U.S. deaths represent the most searing and obvious losses, there have been many others who have faced significant hardship, including a devastating number of America’s small businesses.
Starting a small business has never been easy, but the pandemic brought things to a whole new level. Where previously half of small businesses could anticipate closing within their first five years, a survey conducted by CBIZ revealed that COVID-19 impacted 84% of small businesses, and 43% reported suffering a “significant to severe impact.” Help came in various forms, with the government providing historic federal stimulus funding and communities coming together to support local businesses, but these efforts were often not enough, especially for those industries that were hit the hardest. These industries included:
The service industry that has more hands-on interaction than any other, it is no wonder that businesses that cut our hair, paint our nails, clean our skin and massage our bodies have suffered during a pandemic that has ordered us to stay six feet apart. Tattoo artists and piercing services, chiropractors, and many others are unable to ply their trade online, and this has been particularly difficult for their employees, who often earn low wages and live paycheck to paycheck. As more has been learned about how the virus spreads and what safety measures need to be taken, many have begun to reopen, and it is hoped that with increasing percentages of the public getting vaccinated, things will improve for these businesses.
We all have felt the sense of loss caused by not being able to attend concerts, sporting events, Broadway shows and the like, but the sacrifice that we have made as attendees pales in comparison to the impact on the venues, performers, and athletes. Asked to close their doors for nearly a year, many of the biggest names in the business have reported catastrophic economic losses, and smaller companies without the same deep pockets have been unable to survive. A survey conducted by SANDAG, the San Diego Association of Governments, revealed that more than 70% of these types of businesses reported a large negative effect on their bottom line, and many may not survive, despite recent announcements that they can begin to reopen.
Since March of 2020, the majority of the American public has chosen to remain shut in their homes, and even those who have wanted or needed to travel have found slim pickings as a result of state mandates on indoor dining and the like. As inconvenient as this has been for travelers, the establishments that serve those consumers have had extremely limited earning capability. Hotels and inns, bed and breakfasts, and Airbnb locations have had high vacancy rates for months, and the purveyors that serve them have been similarly impacted. The same is true of restaurants, food trucks, and coffee shops, with Fortune magazine reporting that over 110,000 bars and restaurants will not be reopening. The same SANDAG survey that reported losses in the entertainment industry said that over 70% of entrepreneurs in this industry suffered that same large negative effect, with 62% anticipating that it will take more than half a year for them to get their feet back under them.
Closely related to the accommodations and food services industry, both international tourism and destinations closer to home have suffered similar effects. Many countries closed their borders to U.S. travelers and the United States did the same, while at the same time effectively shutting down major attractions like Disneyworld and Disneyland. The closures impacted more than the venues and their employees: Travel agencies and others in this service industry were heavily affected, and this was a big part of COVID-19’s global economic impact. Tourism supports one in 10 jobs around the world, and for areas whose economies rely almost entirely on travel, the pandemic has been devastating.
Getting people and goods from here to there is what the transportation and warehousing industries do. With fewer people leaving their homes, taxi services, car rental businesses, limousine services, and other shuttles have suffered. The same has been true for those businesses that store goods and hold them until they are ready to be transported. More than half of these businesses reported a large negative effect in the SANDAG survey, leaving the system that many depended upon to receive goods without leaving their homes still struggling, even as things begin to open up again.
As America and the rest of the world begin to see the light at the end of the global pandemic tunnel, there is great hope that these industries will rebound and that the small business owners who saw their dreams dashed by forces beyond their control will be able to take advantage of federal funding to recover.
About Frank Jenkins Jr
Frank Jenkins Jr. CPA is the managing partner of Adams, Jenkins & Cheatham, a CPA practice based in Midlothian, VA. Frank specializes in Consulting services, tax planning, audit & assurances. "I genuinely care about our clients because I have a personal connection with them." He is active in the community and belongs to the AICPA and the VSCPA.
