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UPS has completed the third 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 more than 700 U.S.-based respondents between April 8 and April 13.
While coronavirus cases in the U.S. are approaching the peak of the curve, sentiment among businesses is perhaps nearing the base of the trough.
Since our first wave two weeks ago, the proportion of businesses negatively impacted by the pandemic has grown significantly, from 77 percent to 83 percent. And 53 percent of businesses have now closed or reduced operations — up from 48 percent in week one.
The reality of an extended recovery seems to be setting in as respondents point to long-term instead of short-term operational challenges.
In the first week of the study, just one in five respondents thought a decline in sales would be a long-term issue for their business. Now that figure is up to one in three.
Fears of permanent customer loss are driving this trend: 64 percent of respondents expressed concerns about their customers going out of business, an increase of eight percentage points from the first week.
Business challenges have mostly stabilized, signaling that respondents have begun to adapt to or accept their new operating conditions. But the one exception is cash flow, a major challenge the prolonged shutdown continues to exacerbate.
“While coronavirus cases in the U.S. are approaching the peak of the curve, sentiment among businesses is perhaps nearing the base of the trough.”
The ability to make payroll has become a bigger concern for businesses as a result, up from 55 percent in the first week to 65 percent this week.
In an attempt to increase cash flow, the number of businesses that reported putting their products “on sale” to drive revenue is up seven percentage points in the last two weeks.
Yet ongoing supply chain issues hamper these efforts to increase sales. Three-fourths of respondents pointed to difficulty replenishing their inventories, and 70 percent have seen manufacturing partners shut down.
In addition, for outbound logistics, roughly six in 10 shippers have experienced third-party fulfillment disruptions. Supply chain disruption may be easing, however, as these numbers have dipped slightly from the previous week.
Despite the difficult business environment, there are promising signs within the data.
When asked how they plan to adapt their business for the post-coronavirus environment, one-quarter of respondents said they will increase their focus on online sales — a change necessitated by social distancing that will likely have lasting revenue benefits.
“The ability to make payroll has become a bigger concern for businesses, up from 55 percent in the first week to 65 percent this week.”
And a full 99 percent of respondents now expect to reopen their business after COVID-19, a reassuring indication that the vast majority of businesses still see a path forward.
As one business owner stated, “It takes tenacity and creativity to navigate this pandemic as a small business — and hope.”
UPS will deploy this survey every week to monitor the evolving influence of the COVID-19 pandemic on small and medium-sized businesses.
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