Small businesses are gaining more revenue this year despite the lingering challenges from COVID-19 and reversing last year’s losses, according to a report from Intuit’s QuickBooks unit.
The report examined how small and midsized businesses performed financially in different industries and geographies from March 2020 to March 2021, analyzing anonymized revenue data drawn from approximately 1 million QuickBooks Online customers. Despite their pandemic challenges, 61 percent of industries managed to increase their revenues over that period. A diverse group of businesses actually managed to perform well during the pandemic based on their annual revenue data from QuickBooks Online data. Mortgage bankers saw a 30 percent increase in annual revenue ($148,000 per business) compared to their pre-pandemic performance. Retail nurseries saw annual revenue increase 17 percent ($75,000 per business) while hardware store revenue was up 14 percent ($94,000 per business), thanks to a surge in home improvement projects.
The report indicates that businesses had different experiences during the pandemic, and while some have managed to survive and even thrive, many have not fared well and failed to survive. According to a report released earlier this month by Facebook and the Small Business Roundtable, 22 percent of small businesses in the U.S. were closed in February, close to the highs seen last year at the height of the pandemic, according to CNBC. The Federal Reserve estimates that approximately 200,000 businesses closed as a result of the pandemic last year.
However, at least based on QuickBooks Online data, specialist retailers saw strong growth during the pandemic, with revenue for motorcycle dealers and RV dealers up by 17 percent and 15 percent respectively, and for meat and fish markets increasing 23 percent.
“Intuit QuickBooks data has provided extraordinary insights into the pandemic’s effect on small businesses, for worse, and for better. We can see where the recoveries are, and are not,” said Susan Woodward, founder of Sand Hill Econometrics, in a statement. “Only QuickBooks can see genuine small company revenues, monthly, by industry and location with such accuracy and timeliness.” Intuit commissioned Woodard to do the analysis for the report.
Even some of the hardest hit businesses seem to be back to pre-pandemic levels in some cases, at least for those that have managed to survive. Government aid programs like the Small Business Administration’s Paycheck Protection Program have helped cushion the blow for many companies. For instance, personal care businesses (barber shops, beauty salons) saw a 52 percent drop in monthly revenue when the pandemic first started. Of these, barber shops were the hardest hit, down by 82 percent (equivalent to $12,000 per business) that month. But in nine out of the past 10 months, they have been down less than 20 percent. In March 2021, they were 16 percent above their pre-pandemic revenue.
Clothing shops saw their monthly revenues plummet by 50 percent in April 2020. Of those, women’s clothing shops experienced the largest decrease, down by 56 percent (roughly equal to around $10,000 per business). In nine out of the past 10 months, though, women’s clothing shops have been down by less than 10 percent. Last month, they were 14 percent above their pre-pandemic performance.
“From bowling alleys to dentists, and from coast to coast, no small business was immune to the challenging circumstances that COVID-19 presented this year,” said Alex Chriss, executive vice president and general manager of Intuit QuickBooks, in a statement. “Despite these challenges, our data shows that small businesses are on a path to recovery, demonstrating the resilience and tenacity that small businesses embody for all of us. The spirit of resilience and recovery is evident across the entire QuickBooks platform, and Intuit is committed to helping businesses learn new ways to grow and thrive in the future.”
By the end of last month, all 10 U.S. sectors were back above the monthly revenue benchmarks they set before the pandemic, according to Intuit. Monthly revenue for the construction industry in March 2021 was up by 30 percent; retail was up 22 percent; and manufacturing was up 20 percent.
For the top seven performing industries (finance/insurance, agriculture, fishing/hunting, building/gardening materials, utilities, forestry and crop production) monthly revenues were only down for April and May of 2020, according to Intuit. However, by June, six of those industries were back to pre-pandemic monthly revenues and by September all seven of them were ahead of their pre-pandemic levels.
To be sure, the pandemic closed down many businesses and hurt revenues even in those that have managed to hang on. Businesses in high-density, urban areas — particularly on the East and West Coasts — experienced a bigger negative financial impact than those in rural areas. Small and midsized businesses in Manhattan saw their annual revenue decline $58,000 per business compared to pre-pandemic levels. The other hardest hit cities were San Francisco (with a decline of $36,000 per business) as well as Brooklyn, Honolulu and Santa Monica, all of which saw a decline of $26,000 per business compared to pre-pandemic levels.
On the other hand, businesses in Gilbert, Arizona, saw their annual revenue increase $15,000 per business. Other cities that experienced increases include Boise, Idaho (with a $13,000 increase per business), and Colorado Springs, Colorado (with a $10,000 increase per business).