Throughout 2020, the continuing lockdown measures and social distancing practices were detrimental to in-person retailers and restaurants in particular. A decline in footfall in retail areas meant significant revenue losses for small businesses - many of which relied on government financial assistance to make it through the pandemic.
Business closuresDue to increasing infections and regulations in the first months of the pandemic, many small business suffered. While more than 90 percent of businesses reported no closures - temporary or permanent - at least once percent of small businesses permanently closed a location every month between August 2020 and April 2022.
Throughout the pandemic, small businesses recorded a decrease in the number of employees working in the establishments. Significant decreases were seen at various intervals throughout the pandemic, especially at the end of 2020, and early 2022. In the first year of the pandemic, many employees chose not to go to work in order to avoid infection, while many were unable to return to work due to lockdown measures, and even more workers were laid-off from their jobs entirely.
Business closures were not only the result of lockdowns and lost revenues, though that has played a large role. After many temporary closures, and income relief payments from the government, many workers chose not to return to their former place of work. This was especially true in restaurant and retail locations. In 2021, around 36 percent of restaurants were short on serving staff, and a further 27 percent were short on chefs. Many restauranteurs cited higher wage expectations from workers as the reason for these shortages.
Recover and outlookIn a survey conducted in May 2020, 63 percent of businesses estimated it would take between one and six months for their company to return to business as usual. By September 2021, 85 percent of small businesses reported that they had completely re-opened after temporary closure.
The U.S. economy had a relatively strong economic rebound despite high inflation in 2022. After peaking at 8.1 percent in 2020, the following two years saw a dramatic lowering of the unemployment rate. The unemployment rate reached a 30 year low at 3.6 percent in 2022. Additionally, a record number of new businesses opened in 2022, particularly in the home and local services industries.
Despite these strong numbers, the SBOI had yet to return to pre-pandemic levels at the beginning of 2023. This is more likely to be due to knock-on effects of the pandemic rather than the pandemic itself. In February 2023, 28 percent of small business owners reported inflation as their single biggest issue, with a further 21 percent reporting quality of labor.