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Small Business

By the Numbers: The Impact of the COVID-19 Pandemic on Small Business

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Topics: Small Business

May 5, 2020

Across North America, business owners know firsthand how the coronavirus pandemic has affected their individual businesses. Then, of course, there’s the anecdotal evidence we can all see when passing through town—some businesses like grocery stores are booming, while fast food restaurants only have drive-throughs open, and salons and retail stores are closed altogether. But how has COVID-19 affected small businesses as a whole, across the entire nation? And is there any end in sight to the widespread business losses? To answer these questions, SpotOn performed an in-depth analysis of the payment processing data for all of our merchants. Here’s what we found.

Background

Our analysis compared small business financial data from SpotOn’s portfolio of clients from the week of March 2, 2020 (pre-pandemic numbers) through the week of April 20, 2020, and then the week of March 30, 2020 (recent growth trend) through the week of April 20, 2020. The specific financial data we analyzed included two key metrics:

The Number of Businesses Actively Processing Customer Payments

  • The percent change of this metric over time is a good indicator of how many businesses have been forced to pause operations as a result of the COVID-19 pandemic.

Total Payment Processing Volume for Businesses

  • The percent change of this metric over time is a good indicator of how revenue has fluctuated for businesses due to the COVID-19 pandemic.

General Findings

  • There was a sharp decline in business as shelter-in-place regulations came into effect in early-March, but the decline leveled off by mid-March, and since the week of March 30,  2020, we have seen a significant rebound in business, with total processing volume increasing by 19% and the number of businesses processing increasing by 2%.
  • At the lowest point, 35% of businesses paused processing customer payments, but that number has leveled off and gone up by 2% since March 30, 2020.SpotOn COVID-19 Merchant Data - Graph 1
  • Overall, payment processing volume has contracted by 42% since the onset of the COVID-19 pandemic, but since March 30, 2020, processing volume has gone up 19%.SpotOn COVID-19 Merchant Data - Graph 2
  • The period between March 9 and March 23, 2020 saw the biggest decline in both the number of businesses processing payments (-28%) and total processing volume (-42%).

Food & Beverage Industry Findings

  • The food & beverage industry has experienced a 64% decrease in processing volume since the onset of the pandemic, but since March 30, 2020, has seen a 27% increase in processing volume.
  • Bars and nightclubs were most impacted by the pandemic.
  • Fast food restaurants and bakeries were the least impacted by the pandemic.SpotOn COVID-19 Merchant Data - Table 1 - Food & Beverage Industry

Other Business Sector Findings

  • The small business sectors hit the hardest by the COVID-19 pandemic included amusement parks, barbers & beauty shops, massage parlors, clothing stores, dry cleaners, and medical practitioners.
  • Many of those sectors have started to see growth since the week of March 30, 2020
    Business Sectors Most Impacted (1)
  • Numerous small business sectors saw increased revenue after the onset of the pandemic, including landscaping services, nurseries, bicycle shops, hardware stores, and grocery, convenience, and liquor stores.Business Sectors Showing Growth (1)

States Most and Least Affected by the Pandemic

The state-by-state trends generally mirrored the overall trend we saw with changes in payment processing, with small businesses in some states being impacted more significantly than others after the onset of the pandemic, and then most states seeing new growth in revenue since the week of March 30, 2020. 

The states most severely impacted by the pandemic since March 2, 2020 (using payment processing volume as a metric) included:

  • Nevada: -62%
  • Massachusetts: -59%
  • California: -58%
  • Michigan: -57%
  • Ohio: -57%
  • New Mexico: -56%
  • Maryland: -53%
  • Washington: -53%
  • Louisiana: -51%
  • Indiana: -50%

% Growth in Payment Processing Volume by State
Week of 4/20/2020 compared to Week of 3/2/2020 (pre-pandemic)

SpotOn COVID-19 Merchant Data - Map 1

Most states have seen revenue start to increase (using payment processing volume as a metric) since the week of March 30, 2020. For example, the most impacted states listed above experienced the following growth:

  • Nevada: +2%
  • Massachusetts: +1%
  • California: +13%
  • Michigan: +28%
  • Ohio: +18%
  • New Mexico: +21%
  • Maryland: +88%
  • Washington: +32%
  • Louisiana: +15%
  • Indiana: +23%

% Growth in Payment Processing Volume by State
Week of 4/20/2020 compared to Week of 3/30/2020 (recent growth)SpotOn COVID-19 Merchant Data - Map 2

Conclusions

Our data analysis shows that small businesses overall have experienced a decrease in revenue as a result of the pandemic, with several small business sectors having to temporarily pause business and other sectors experiencing significant growth. The decline in business plateaued starting the week of March 23 and then began to recover, starting the week of March 30, 2020.  

The food & beverage industry, in particular, appears to be a good indicator of how other businesses sectors will respond. Just as restaurants, bars, and bakeries have adapted to pandemic-related restrictions with online ordering, contactless payment, and curbside pickup, so too will other businesses find innovative solutions that enable them to serve their customers and earn revenue.

While these times are presenting numerous challenges, they’re also presenting opportunities for businesses to modernize and adapt operations so that they can better serve their customers, both now during the ongoing pandemic and in the long-term. Specifically, SpotOn has been working closely with our small business clients to equip themselves with:

For more information on how SpotOn is helping our clients, please visit our COVID-19 Knowledge Base.

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