The lucky few winners and the many losers of the coronavirus business lockdown
April 2, 2020 / By Nihal Krishan
While most local businesses, such as hair salons, retail stores, and bars, are being devastated by the stay-at-home orders to slow the coronavirus outbreak, other businesses are experiencing incredible upswings in sales, such as gun shops, stores selling groceries, pet supplies, and liquor.
Nationally, gun and ammunition shops started seeing significant spikes in sales starting on March 12, around the same time President Trump declared a national emergency. Grocery stores, supermarkets, pet stores, and liquor stores also saw big surges in sales at the same time, according to new data from Womply, a data analytics and software firm that focuses on small businesses. These businesses prospered as consumers nationwide stocked up amid increasing fears and lockdown orders.
Another analysis of small businesses, by bookkeeping platform Xendoo, shows that information technology companies grew 24% in March compared with the previous year and, unexpectedly, companies that offer pool, landscaping, and other related services have not been drastically impacted by the economic shutdown in the past couple weeks.
Sales at grocery stores, gun shops, and liquor stores have started to slow in the past few days, though, as supplies dwindle and more people stay at home, but they are still faring far better financially than most industries across the country, which have been hit tremendously hard by the coronavirus economic shutdown.
According to a recent poll by Womply of 2,300 small business owners, 21% said their business would last less than 30 days if sales stopped, and 55% said they would last less than 90 days or three months. The survey also showed that many small businesses will already be dead before the federal government’s emergency economic relief loans are provided.
New data collected by Womply from Wednesday also shows that a significant majority of small businesses within certain industries, such as health and beauty, arts and entertainment, bars, sports, and recreation, have stopped transacting and effectively shut down altogether.
Womply found these trends in small business activity by analyzing the debit and credit card transactions of millions of local businesses across multiple major industries.
Brad Plothow, the vice president of marketing and communications at Womply, said, “It’s striking how quickly many of these businesses go from transacting to not at all,” after nonessential businesses started shutting down from March 11 onward.
“It’s hard to tell how many are dead forever versus those who can find a way to pull out, but it’s not looking good,” Plothow said.
A potential silver lining during this period of immense economic hardship, though, is that certain small business owners have used the lockdown to implement internal improvements and become more financially literate about their companies.
“Small business owners who are forward-thinking, glass-half-full kind of people are looking into new technologies, marketing techniques, and physical improvements to their businesses,” said Lillian Roberts, the CEO of Xendoo, which provides bookkeeping and accounting services to hundreds of small businesses across the country.
“In terms of behavior change, we’ve seen many more business owners being engaged in their finances, which makes them think differently about their business. If that behavior stays after the virus ends, it’ll help small businesses to get stronger in the long run,” Roberts said.
Roberts also said that she was impressed to see the federal government act quickly to pass economic relief packages that she expected would have a “tremendous impact” on small businesses.
“We’ve gone from despair to hope within the past week. Now small businesses, they have hope,” Roberts said.