UPS Longitudes | More Signs of Improvement for Small Business

UPS has completed the seventh week of a study to measure the impact of COVID-19 on small and medium-sized businesses across the United States. This installment went to 400 U.S.-based respondents between May 6 and May 11.

While the coronavirus remains a heavy burden on small businesses, this week’s results indicate that the pandemic’s impact continues to abate.

We observed the lowest point of the downturn four weeks ago, and since then, the survey data has shown consistent signs of improvement.

The proportion of businesses reporting a negative impact has dropped to 73 percent, down from a high of 83 percent a month ago. While the majority of respondents are still grappling with this pandemic, the number who report that they are “significantly” impacted has declined considerably.

Many SMB challenges have also subsided during this four-week period. The share of respondents citing cash flow challenges has dropped 13 percentage points to 69 percent. Possibly driven by government assistance from the Paycheck Protection Program, among respondents who applied for funding, 63 percent report they have received it.

Another factor that may be driving improvements in cash flow is the return of sales revenue. The number of businesses experiencing revenue declines has steadily dropped during the last four weeks and now sits at 66 percent, 13 points below its peak.

One reason for this positive revenue trend is that businesses are beginning to reopen. For the first time since this study began, more respondents are open for business (54 percent) than remain closed or operating at reduced capacity (46 percent).

“The share of respondents citing cash flow challenges has dropped 13 percentage points to 69 percent. The number of businesses experiencing revenue declines has steadily dropped during the last four weeks and now sits at 66 percent, 13 points below its peak.”

Many businesses have placed a greater emphasis on customer service throughout the pandemic, and that strategy may also contribute to the positive revenue trend.

Respondents are adapting to the changing needs of their customer base by extending payment terms when needed, offering new pickup and delivery options and, as one owner noted, “giving customers as much free stuff as we can offer.”

Yet supply chains continue to be a concern as businesses reopen. Fifty-four percent of respondents stated that their single biggest threat to meeting accelerating customer demand is their inability to obtain sufficient inventory from suppliers.

As these inventory challenges persist, the share of respondents planning to “near-source” their supply chains increased this week to 17 percent.

“We will replace as many offshore suppliers as we can,” stated one business owner.

“For the first time since this study began, more respondents are open for business (54 percent) than remain closed or operating at reduced capacity (46 percent).”

These supply chain plans reflect the optimism of survey respondents who are eager to shore up their inventories in anticipation of customer demand. This is one of the many things that businesses are doing to prepare for the post-pandemic environment, from improving their products to ensuring a healthy work environment.

While they acknowledge uncertainty remains, these business owners are not letting disruption stop them from planning for a more prosperous future.

UPS will deploy this survey every week to monitor the continuously evolving influence of the COVID-19 pandemic on small and medium-sized businesses.

Read part one, part two, part three, part four, part five and part six in this small business series.

Read more on UPS Longitudes here