Facebook has released its State of Small Business report detailing the damage the coronavirus pandemic has had on small, medium and personal businesses over the past few months.
The report, which was produced in collaboration with the Small Business Roundtable took in data from 86,000 owners, managers and employees of US companies that had less than 500 employees on their books. The research will form a bedrock of data that Facebook intends to present to the World Bank and the Organization for Economic Cooperation and Development on the Future of Business.
Sheryl Sandberg, Facebook’s chief operating officer said the company had been developing the report well before the COVID-19 situation made it almost impossible for small, medium and personal businesses to operate. “We were already in the process of developing this report before the coronavirus pandemic hit. We expected it to be a pretty rosy tale back then of low unemployment, flourishing entrepreneurship, and jobs growing all over the world. Fast forward to today, and we’re in a very different position.”
“What we know today is pretty sobering,” Sandberg said. “We’re in a really hard economic situation that is hitting all businesses, but particularly, small businesses really hard.”
“We also know how critical small businesses are for jobs - long before coronavirus. Two-thirds of new jobs in this country happen because of small businesses and so that means what’s happening with small businesses has always been important, but it’s more important than ever.”
The report states that 45% of business operators intend to rehire the people they’ve been forced to let go, while just 32% of personal business managers say they will rehire the same member of staff.
“If these businesses are letting people go, it’s not that they don’t want to rehire them,” Sandberg said, “it’s because they don’t think they’re going to be able to. That’s a pretty serious thing for us to be facing,” she said.
Facebook’s report shows that since the beginning of the pandemic, 51% of small business owners have increased the number of interactions with customers online via its platforms, and a further 36% have moved to an online-only platform.
Sandberg said that “one of the things I find so amazing is how much of the activity has migrated online and that we’re doing things we never thought were possible… If I had asked you or you had asked me, could I work entirely from home? Can my whole company go home? I would have said ‘No way.’ But we did it. Small businesses have even more entrepreneurial spirit,” Sandberg concluded.
Facebook has previously announced that its Facebook Shops, an eCommerce platform that will allow businesses of all sizes to customize their storefront, that it hopes will spur more trading activity for small and medium-sized businesses. The platform will connect prospective buyers with the brand via instant messaging, and will have the ability - with its vast amount of data stored - to present relevant products tailored to an individual’s taste.
“Our goal is to make shopping seamless and empower anyone from a small business owner to a global brand to use our apps to connect with customers,” Facebook founder Mark Zuckerberg wrote in a blog post.
It comes at a particularly dire time for the 30,000,000 small businesses currently operating in the US, 71% of which are yet to receive any financial support from the Paycheck Protection Program announced by the federal government, according to data from Goldman Sachs.
64% of these businesses say they lack adequate cash reserves to weather the next quarter, and as of April 19, more than 175,000 businesses have either temporarily or permanently closed their doors, bringing closure rates up more than 200%.
Facebook says that anywhere between 70-74% of employees of these small businesses have not had access to any paid leave, with more than 90% of hospitality employees left without access to any sick or paid leave.
In light of these statistics, Facebook has launched its own grant program for small businesses, with $100 million on offer for eligible companies. The majority of the funds will be passed out as cash grants, with another pool of credit offered to businesses to use for paid ads on the Facebook platform.
$40 million will be passed out across 34 cities, with 50% of the funds reserved for women, minority and veteran-owned businesses, with the remaining $60 million headed to small business operators overseas.
In spite of the dire circumstances, many small business owners remain optimistic about the pandemic, with 57% responding that they’re hopeful about the near future. Rhett Buttle, founder of Public-Private Strategies and co-executive director of the Small Business Roundtable says that “the report raises awareness about the struggles small businesses face from the COVID-19 pandemic.”
“But small businesses have brought us out of previous economic downturns and they will do so again,” he concluded.