Fifty-five per cent of small and medium-sized businesses around the world reported lower sales in October than in the same month last year as businesses faced disruptions caused by Covid-19, according to a new survey.
To tackle the downturn, SMBs are cutting costs, in part by reducing workforces, the survey by Facebook, the World Bank and the Organisation for Economic Co-operation and Development showed.
Almost 34 per cent of SMBs said they have reduced employment in response to the pandemic.
“The pandemic is both a health crisis and an economic one that has hit small businesses particularly hard … many have closed permanently,” Sheryl Sandberg, Facebook’s chief operating officer, said.
“Many that remain open face huge challenges to stay afloat, pay their employees and serve their communities ... as the year draws to a close there is still uncertainty all around, but there are also signs of light ahead,” she added.
The report, which surveyed more than 25,000 SMB owners, managers and employees in over 50 countries in the last week of October, defines SMBs as those with 500 or fewer employees. SMBs tend to differ from SMEs by employment, with the former often relying on part-time workers or outsourced staff and the latter employing full-time workers.
SMB leaders anticipate that challenges such as a lack of demand (43 per cent) and reduced cash flow (35 per cent) will persist in the coming months, according to the report.
Some 15 per cent of businesses said their businesses were closed during October, a slight decrease from May, when 26 per cent of surveyed SMBs were closed.
The survey also found female business owners had been more affected than their male counterparts.
Since the start of the pandemic, 31 per cent of female business leaders surveyed spent more time on domestic tasks relative to pre-pandemic levels, compared to 26 per cent of male business leaders.
“Women are more likely to have caregiving responsibilities, more likely to lose their jobs or have their pay cut, and more likely to feel overwhelmed, stressed or anxious,” said Ms Sandberg.
However, the majority of SMB leaders remain positive about future prospects.
Nearly 56 per cent of respondents are either optimistic or very optimistic about the future of their businesses.
“Many [SMBs] have acted creatively to find new ways to reach customers, with more than one in four reporting that they have increased or greatly increased their proportion of sales they have made digitally during the course of the pandemic,” Ms Sandberg said.
Consumer-facing sectors such as hotels and restaurants remain the most apprehensive about the coming months. Almost 52 per cent of firms in these sectors cite a lack of demand as a future challenge, while 40 per cent have cash flow concerns.
Overall, SMBs remain concerned about the prospect of further lockdowns, particularly in countries and regions that have reintroduced stricter measures. Nearly 18 per cent of SMBs said that they would be unable to continue operating within the next three months if future lockdowns are imposed.