Of all the sectors impacted by the COVID-19 pandemic, SMBs look set to be among the hardest hit.
Small to medium businesses generally operate at very tight margins as it is, and they don’t have the same safety nets that larger corporations are able to fall back on. As a result, predictions suggest that up to 7.5 million small businesses in America are at risk of shuttering permanently in the coming months unless they’re able to find a way to recoup costs, and get back to some level of regular operation.
The expanded impacts of this – on employment, opportunity, local economies, etc. – are difficult to fully comprehend. But while the forecasts are dire, it’s likely of more value to get some sense of what’s actually happening on the ground. What are SMBs seeing at the moment, how are they dealing with the impacts of the pandemic, and how do they feel about their situations moving forward?
This week, Facebook has published a new report to shed some more light on this, incorporating responses from over 86,000 people who own, manage or work for a small to medium-sized business. The data also includes 9,000 operators of “personal” businesses (i.e. people who reported that they were “self-employed providing goods or services”).
The report provides a range of insights into SMB sentiment, and may also highlight rising areas of opportunity moving forward. You can read Facebook’s full report here, but below are some of the key points of note.
First off, Facebook’s report provides some scale as to how many businesses have actually been significantly impacted by the COVID-19 lockdowns, with a look at the percentage of SMBs in each sector that are currently unable to operate.
Many businesses, of course, have been able to shift to alternate operational models, like working from home or putting more focus on delivery. That makes it difficult to get a true sense of the full impacts of the current lockdowns – but this chart gets a little deeper into the actual reality of the situation.
As per Facebook:
“According to the survey, 31% of small and medium-sized businesses have shut down [entirely] in the last three months. The situation is worse for personal business (52% of which report shutting down), hotels, cafes and restaurants (43%) and services like wellness, grooming, fitness or other professional services (41%).”
Most of these trends are as you would expect, with high exposure businesses going into forced hibernation. But it is interesting to note the scope of the impacts, with all sectors seeing at least some closures. The numbers also wrap some further context around the 36 million unemployment claims in the US over the past six weeks.
The question, then, is how many of these businesses expect to recover, and rebound once the lockdowns are lifted?
That’s obviously difficult to answer, as we don’t know how long it’s going to take to ‘snap back’ to our normal way of life, and the longer the forced closures remain in place, the worse the economic situation gets.
In general, however, the majority of SMBs remain cautiously optimistic.
There are a lot of ‘maybe’s here, but most notably, there are very few ‘No’s. That reflects the pervading uncertainty, but also provides some hope of getting most people back into employment, and the economy back on track, at some stage.
In the report’s further notes, Facebook also provides some context as to current impacts on revenue, even for those businesses that have remained in operation.
Unfortunately, for almost everybody, 2020 is essentially a write-off for growth plans.
But as noted, there are some indicators of future potential, in addition to enduring owner optimism/hope.
More businesses are exploring online connection opportunities and digital payments, which are both progressive steps towards the next generation of consumption.
That may actually end up being the biggest long-term shift we see stemming from the COVID-19 shutdowns. With consumers forced to shop online, many will become more accustomed to the convenience of such, aided by the simplicity of digital payments. For those already working in the digital sector, that could lead to ongoing opportunities to help usher more businesses along this shift, with many, potentially, putting increased reliance on digital connection, and shifting their business models in line with what the next generation of consumers are growing to expect.
COVID-19 may exacerbate this shift – and while retail is only one of the sectors highlighted here, the trend may well be indicative, which could prompt more businesses to consider their options for digital operations, meeting consumers where they’re spending more and more of their time.
Essentially, the lockdowns have forced many businesses to look at their online opportunities, which could have benefits going forward, and could even help SMBs expand their reach into new markets in future. But the immediate path ahead remains tough and uncertain, at least until some sort of breakthrough is reached.
Hopefully, there are enough alternative revenue paths to keep most SMBs running as we navigate through the pandemic – but it may well be worth exploring digital options, where possible, to align with broader consumption shifts.
You can read Facebook’s full, 36-page “State of Small Business Report”, which includes a heap of more specific insights and data, here.
Jack Dorsey Exits Twitter Board, Clearing the Way for the Elon Musk Era at the App
While there’s no new news on the Elon Musk takeover saga, we do have another reminder that Twitter’s leadership team is never going to be the same, regardless of what comes next, with co-founder and former CEO Jack Dorsey today leaving the Twitter board, effective immediately.
Dorsey’s full exit removes another big chunk of experience from the company – over the past two weeks, Twitter has lost:
- Consumer product leader Kayvon Beykpour, who’d worked at Twitter for four years
- Head of revenue product Bruce Falck (5 years)
- Ilya Brown, a VP of product management (6 years)
- Katrina Lane, VP of Twitter Service (1 year)
- Max Schmeiser, head of data science (2 years)
That said, Dorsey’s move, isn’t a surprise.
Back in November, when Dorsey announced that he was standing down as Twitter CEO, he also noted that he would stay on Twitter’s board till around ‘May-ish’ to help incoming CEO Parag Agrawal and incoming Twitter Board chair Bret Taylor with their respective transitions.
Of course, back then, Dorsey couldn’t have predicted the chaos on the horizon, but despite the distractions of an imminent takeover, Dorsey has decided to stick with his original plan, and step away from the platform that he helped build.
That clears the path for a new era under Elon Musk, who has vowed to make significant changes to the way that Twitter operates – though of late, Musk seems to be more distracted by stats on population decline and political conspiracies than he does in completing the Twitter deal.
On May 13th, Musk said that his Twitter takeover offer was effectively ‘on hold’ pending more data from Twitter on its fake profile count, which it pegs at 5% of active users. Many users have since shared partial evidence that, in their opinion, proves that this number is not correct, while Twitter itself has maintained that there’s no such thing as ‘on hold’ in the takeover process, and that it’s preparing for the deal to close sometime soon.
Musk says that he won’t pay full price for something that’s not what he believed he was purchasing.
But then again, Musk also waived doing detailed due diligence on Twitter’s business, in order to reach an agreement faster, which means that he may be tied to the purchase anyway, regardless of what Twitter or anyone else may find here.
For his part, Dorsey has been a strong advocate for Musk, and his interest in Twitter, and has noted several times that he believes Musk is the best option to ‘save’ the company.
Elon’s goal of creating a platform that is “maximally trusted and broadly inclusive” is the right one. This is also @paraga’s goal, and why I chose him. Thank you both for getting the company out of an impossible situation. This is the right path…I believe it with all my heart.
— jack (@jack) April 26, 2022
Now Dorsey is getting out of the way to let that happen, which will mean that none of Twitter’s four founders remain in any position to advise or guide the platform in any direct capacity from now on.
That could be a good thing. Twitter, of course, is a far cry from what it was in the beginning, and maybe now it needs to detach from its founding concepts to reach its next stage.
But again, that’s a lot of experience heading out the door, with current CEO Agrawal also on the chopping block, according to Musk’s statements.
How that impacts Twitter’s future direction is hard to say. Again, Musk has already flagged significant changes, but without experienced voices advising him on what’s happened in the past, he could be doomed to repeat previous mistakes, impeding the company’s progress even more.
Or maybe it makes things easier, without the constraints of past limitations holding things up. I would lean towards the former, but clearly, Musk has his own ideas about how he’s going to transform the app, once he does, eventually, take control.
Which seems like more of a ‘when’ than ‘if’, but maybe Musk has some other trick up his sleeve to either reduce his offer price or get out of the Twitter deal entirely.
Either way, massive changes are coming to the app, which could alter the way that it’s used entirely.
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