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With Revenue Still Down From Last Year, 2021 Is Make-or-Break For Small Businesses

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With Revenue Still Down From Last Year, 2021 Is Make-or-Break For Small Businesses

After a year of pandemic-driven social distancing measures and full scale shutdowns, the landscape for small businesses circa 2021 remains challenging. And while domestic COVID-19 infection trends have been moving in the right direction since the start of the year, small businesses are still facing major challenges in securing enough capital to weather the ongoing privations of the public health crisis.

For many small business owners, the situation is dire, and current reopening timelines have not provided much hope for a swift recovery in the new year. Credibly has worked with thousands of small businesses throughout the pandemic to ensure they have enough financing to last out the near-term struggles many are facing.

However, measures from local governments, as well as the indomitable efforts of the nation’s business owners, are aiming to protect main street businesses and, hopefully, allow them to emerge from the current crisis at full strength.

Small Businesses Strained For Sales

A recent survey conducted by the Federal Reserve System’s 12 national reserve banks among nearly 9,700 employer firms reveals that 88% of businesses have not seen their sales rebound back to pre-pandemic levels, with more than half of respondents indicating their revenue has fallen by more than 50% in that span.

More alarming is that, of those firms that have seen their revenue drop through the past 12 months, 39% say that they don’t anticipate they can survive for much longer unless they are able to retake their pre-pandemic benchmark in the coming weeks and months.

To make up for the shortcoming in sales, business owners have leveraged their personal funds, cut staff and hours and have taken on debt through loans, primarily with large financial institutions. In fact, fewer small businesses took on loans with non-bank lenders in 2020 than in 2019, falling from nearly a third of survey respondents in 2019 to 20% in 2020.

While the foreseeable future will likely force business owners to diversify their financing options and seek out new capital streams, there are some promising developments that may suggest a light at the end of the tunnel is within sight this year.

Ramping Up For Reopening

At the moment, activity on the local scale is the key lifeline that many small businesses are relying on to recover the revenue ground they have lost through the past 12 months. Most businesses are currently functioning under state and city capacity restrictions of anywhere between 10% to 50%.

While this limited capacity is obviously a hindrance to boosting sales for many businesses, more and more cities and states are expanding those parameters to allow for larger gatherings. New York City just announced it would begin allowing venues to begin hosting events at 10% capacity, provided the attendees are vaccinated, and similar measures are being taken throughout the country as new infections drop.

Although working under limited capacity is not ideal, business owners should spend this early period considering how they can leverage the increasingly permissive reopening requirements in their area to increase both their sales and the visibility of their business. This can include expanding your businesses footprint to allow for more customers at a given time, but could also include running special offers or discounts at different times of day to improve customer flow.

Even if capacity isn’t the main concern, businesses that rely on walk-in customers or those that sell to other businesses should invest in promoting themselves as the country looks toward returning to some semblance of normalcy in the coming months. These business owners would do well to reach out to clients and business partners and circulate their plans for the near future and how their business fits into the wider community’s reopening efforts.

While it will undoubtedly take longer than a single year to recover from the traumatic events of the previous 12 months, business owners and the nation at large are primed for a return to some semblance of normalcy. Whatever steps small business owners can take to achieve this ambition, both in providing goods and services to their communities and ensuring the safety of their customers and employees, will ultimately pay dividends once the current pandemic is finally brought to heel.

 

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Posted-In: CrediblyFintech News Federal Reserve Startups Small Business