CHICAGO — While the pandemic has been receding, mask mandates have fallen away and more people are returning to the office, a new study found that the effects on small businesses will likely be long lasting.
A new survey released earlier this month by UpCity, a Chicago-based small-business research firm, examined how small-business owners have reacted and changed their business practices in response to the coronavirus.
The survey, conducted in January 2022, spoke with 600 small-business owners in the United States and Canada. Topics covered in the study included budget allocations and adjustments throughout the pandemic and changes to employee benefits, among other items.
When asked if they cut back on spending since Spring 2020, 57% reported that their spending decreased, 34% said it stayed the same and 9% said that their spending had increased.
“The imperative over the last three years across many industries has been to do more with less in order to maximize the bottom line,” UpCity says, “so it makes sense that regardless of very little shift in revenue, businesses continued to reduce spending where possible.”
The ways small-business owners are spending their budget has also shifted from pre-pandemic practices. The study found that 27% of businesses are spending more on software and tools than before, while 15% have increased their marketing and advertising expenditures. In-house hiring (14%), third-party service outsourcing (13%) and HR benefits and payroll (13%) were also higher in post-COVID spending.
The survey also found that small businesses were learning to do more with fewer employees. There was a 7% increase in the number of organizations retaining less than five employees, with a 7% decrease in the number of businesses retaining more than 251 employees.
When business started to return after the shutdowns ended, the labor market became much more competitive, with more businesses trying to find workers in a shrinking labor market. The study found that 34% of small businesses increased their employee’s pay since the pandemic began, and 34% of those businesses also expanded their health benefit options, including mental health benefits.
“The Pandemic has been a wake-up call for not just the workforce, but also business owners,” UpCity says. “While many businesses were helped by government programs such as the Paycheck Protection Program, not every small business was covered by the PPP, and therefore it was difficult to maintain payroll and staffing when many businesses had little to no revenue coming in. While layoffs were common, many businesses understood the human element involved and worked as hard as they could to maintain their staffs and adjust policies to meet their needs.”
In addition to increased health coverage, other benefits listed included paid leave policies (26%), tuition reimbursement (3%), company stock options (9%), life insurance policies (9%) and home office equipment stipends (14%).
The survey, conducted by Pollfish for UpCity, has a margin of error of 4%.
(Image licensed by Ingram Image)