State Of Small Business Report Released: How Is MA Doing?

MASSACHUSETTS — First triggered by a global pandemic two years ago, small businesses across the country have taken a hit, and many are still struggling to stay afloat, according to the latest Global State of Small Business report, compiled through research conducted by social media giant Meta.

According to the new report, small business closures have fluctuated throughout the pandemic, first making a comeback from the initial shock in March 2020, then deteriorating again at the start of 2021, and once again when the omicron variant took the nation by force at the end of 2021.

The last survey, conducted in July 2021, found that closure rates were 18%, much lower than levels
observed in May 2020 at 29%. This survey, conducted in February 2022, found that closure rates were higher again, reaching 21 percent.

In this case, a closure was defined as a business that was "non-operational" or not generating any revenue. The report did not distinguish whether the closures were permanent or temporary.

The most amount of small businesses closures were reported in Texas (27 percent), Pennsylvania (26 percent), and Tennessee (25 percent), with increases of 5 to 9 percent from 2021.

Massachusetts came in a close fourth with 22 percent of small businesses closing, an increase of over 10 percentage points since July 2021.

In contrast, small businesses in Washington were the least likely to report being closed. (7 percent down from 14% in July 2021.) Washington was the only state to experience a fall in the closure rate of more than 3 percentage points.

The current report delivers insight from a survey conducted in January 2022 of 23,840 small businesses across 30 countries and territories, including 5,324 small businesses in the US. The reporting is limited to small and medium-sized businesses that identify themselves as a company with fewer than 250 employees.

Other Massachusetts survey findings:

• More than half of Massachusetts small businesses reported sales in the past month were higher than the same month last year, while 31% reported their sales were lower.
• 14 percent of operational small businesses using the Facebook platform reported they had
  reduced the size of their workforce as a result of the pandemic.
• 77 percent of operational small businesses using the Facebook platform said they were
  confident in their ability to continue operating for at least 12 months if current circumstances were to continue.
• 76 percent of women-led small and medium businesses in our state, and 82 percent of men-led businesses, reported they were staying afloat.
• 55 percent of operational Massachusetts small businesses using the Facebook platform said they have received no financial assistance since the start of the COVID-19 pandemic, compared to the US average of 64 percent.

National and international survey results

This year's report highlights the immense toll the pandemic and omicron variant has taken on small businesses, especially those owned by women and people of color.

This report surveyed 23,840 small businesses across 30 countries and territories in January 2022. Meta partnered with the Small Business Roundtable to compile its U.S. data.

In January 2022, nearly 1 in 5 small businesses - or 20 percent - reported being closed, a rise of 3 percentage points relative to July 2021. Surprisingly, this is a small increase from previous fluctuations that have been occurring since Meta began surveying small businesses in 2020 and may reflect the large number of cases rising from the omicron variant at the time.

Compounding the closures, just over half of U.S. small business owners reported higher sales or steady sales in Feb. 2022 compared to the previous year, 6 percentage points higher than July 2021 levels.

Here are some other nationwide findings highlighted in the report:

• Just over half of those surveyed were confident in their ability to continue operating for at least six months if the pandemic and current conditions persist. A similar proportion said they didn't plan to rehire laid-off or furloughed employees in that time, either.

• 76 percent of women-led small businesses, versus 82 percent of men-led small businesses, using the Facebook platform reported that they were operational or engaging in any revenue-generating activities.

• Approximately 26 percent of minority-led small businesses reported being closed, an increase of 6 percentage points compared to July 2021, relative to a US average of 22 percent.

• Lower sales performance compared to the same month last year was reported by 51 percent of Black-led small businesses and 44 percent of Hispanic-led small businesses, compared to a US average of 36 percent.

Sheryl Sandberg, chief operating officer at Facebook, said in a statement the report is a "timely reminder" that many small businesses are "still vulnerable and in need of support, and those feeling the impact of the pandemic the most are female and minority-owned businesses — a further reminder that whenever crises hit, it's the most vulnerable who are always hit the hardest," Sandberg said.

More than 2 years after the onset of the COVID-19 pandemic, business outcomes have markedly improved across all regions surveyed. Since the first Global State of Small Business Survey in May 2020, small businesses' rates of closure have declined, sales performance of operational small businesses has improved and the proportion of operational ones reporting reduced employment has fallen.

Read the full Global State of Small Business report online.