SMBs

Why Main Street SMBS Are Optimistic – And Why They Should Be

Perhaps the greatest indicator of optimism is the willingness to put one’s money where one’s mouth is.

That’s especially true for small businesses, where optimism is showing up across any number of metrics.  We noted in this space on Monday that initial applications for employee identification numbers (among the initial applications to get businesses up and running) were up at a pace not seen in more than a decade.

Through the pandemic that has seemed interminable but which has only been with us since the spring, small- to medium-sized businesses (SMBs) have grappled with the need to embrace a digital-first mindset, even while top-line pressures have been horrific. You’re no doubt familiar with the various forms of stimulus and funding programs that had sought to help these smaller companies have at least some cash cushion and keep at least some measure of staff on the payroll. It can be said, though, that the Paycheck Protection Program and the Main Street lending efforts from the Federal Reserve and other agencies have been, at best, mixed in terms of success.

And yet: Though we’re now more than 200 days into a worldwide malaise, business owners are confident, increasingly so, about their ability to make it through some hugely trying times.

As recently as August, and as detailed in a half year check on SMB sentiment across more than 500 firms, 54 percent of SMBs owners said they felt they would be able to stay open — that is, survive — well above the 42 percent that had similar expectations as recently as March.

And, perhaps remarkably, a full 24 percent of respondents said they had an actual improvement in their financial situation since March, and 65 percent said their financial status remained the same. Among the more optimistic of verticals: 61 percent of restaurants stated they were not at risk of closing before the pandemic runs its course.  Drilling down a bit, as many as 27.8 percent of restaurants said their fortunes had improved. Part of that survival comes from the digital shift, yes, but the optimism comes, too, as restaurants await pent-up demand and as they know, there are no viable alternatives for that desire to congregate at tables (once it’s safe to do so). As reported this week, U.S. restaurant revenues were still down some 9 percent year over year in August, that’s a big improvement from the pandemic’s early days over the spring.

The ripple effect has been a positive one — as we found, only 8 percent of smaller firms have been unable to pay suppliers, down from 10 percent in March.  Only 6 percent of our Main Street SMBs have failed to meet their monthly bills, leagues better than the 12 percent seen as recently as May.

Green shoots abound, but to be sure, they are fragile ones. But there may be some dry powder to boost consumers (and thus SMBs) moving ahead.  The U.S. personal savings rate hit a historic 33 percent of disposable income in April.  

The waiting game continues, but SMBs seem to be sanguine about their ability to wait it out.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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