Small businesses around the world have struggled since the start of the pandemic more than a year ago. While the roll-out of vaccines gives a reason to be hopeful, our latest Global State of Small Business Report is a timely reminder that many are still vulnerable and need support. And those feeling the impact of the pandemic the most are women and minority-owned businesses – a further reminder that whenever crises hit, it’s always the most vulnerable who are hit the hardest.
For this report, we surveyed more than 35,000 small business leaders across 27 countries and territories in February. What they told us makes for sobering reading. Nearly a quarter (24%) reported their businesses were closed, up from 16% in October and not far from the peak of 29% when many countries were in the first major Covid wave last May. The sharpest increases were in Europe, coinciding with recent lockdown measures. Those that are still open continue to cope with lower sales, and 30% have had to reduce their workforces.
Worryingly, just over half of those surveyed were confident in their ability to continue operating for at least 6 months if current circumstances persist, and a similar proportion said they didn’t plan to rehire laid-off or furloughed employees in that time either.
We’ve learned time and again through our small business surveys that firms led by women are harder hit than those run by men. This time they were on average 6 percentage points more likely to be closed globally. The biggest gender gaps were in Europe and Latin America, and in some cases, they are really stark. In Portugal and Germany, for example, closure rates were 29 and 28 percentage points higher for women-led business respectively, and there was a 14-point gap in Brazil and a 10-point gap in Argentina. Globally, those that were able to stay open were also more likely to report a drop in sales – a 4 percentage point gap overall, but 7 points in the U.S.
It has also been clear since the early days of the pandemic that Black, Asian-American, and Hispanic businesses have been hit harder than most. In the U.S., more than half of minority-led businesses reported a drop in sales compared to the previous years – 6 percentage points higher than other small businesses. And for many that drop in sales was really significant. Almost two-thirds of Black-led businesses and 46% of Hispanic-led ones that reported a drop in sales said it was by over 50%.
If there’s a silver lining, it’s that many businesses found success online. More than half of those surveyed said they used digital tools to communicate with customers, and those reporting higher shares of digital sales were also more likely to have reported more robust sales overall.
Facebook is in the business of small business. More than 200 million businesses use our apps every month to create virtual storefronts and reach customers – with millions using our tools to help them make the transition online since the start of the pandemic. Whatever challenges and opportunities they will face in 2021 and beyond, Facebook will continue to do all we can to help them survive and, hopefully, thrive online.
You can read the full Global State of Small Business Report here.
