The latest PNC semi-annual survey for small and mid-size business owners and executives revealed that businesses are making major changes to their operations amid the COVID-19 pandemic, including increased use of technology.
Nearly eight in 10 (79%) reported that they have made adaptations to their business in response to COVID-19, including safety changes (69%) in the form of new policies and procedures (62%) or physical modifications (57%), while others have adopted work from home policies (33%).
“Business owners have learned that the previous status quo won’t work now. The majority of businesses have reconfigured their operations and for many, these changes will be permanent,” Gus Faucher, chief economist at PNC, said. “Their confidence may be shaken, but we know through the history of this survey that business owners are resilient and they know how to adapt to change.”
According to the survey, 51% of businesses report increased use of technology since the outbreak began. A third (33%) have increased technology to improve workforce productivity. Nearly three in 10 (29%) have added or increased the use of electronic or touchless payment systems, electronic /website-enabled sales (23%) or electronic banking/cash flow management services (21%), while nearly 19% increased use of fraud/identity protection tools.
The pandemic has forced many to shake up their product lineups to better align with consumers’ new habits. A third (33%) of business owners report making product-related changes, either in the way they sell or deliver their products and services (31%) or to the types of products and services they offer (13%).
The drop in business activity over recent months forced many to take drastic measures through workforce reductions, as nearly four in 10 businesses have cut workers since the start of the pandemic, although for 87% of those, the decrease is considered temporary or a furlough. In fact, a majority (58%) of the businesses who had temporary layoffs or furloughs have already begun re-hiring.
Faucher said the worst may be over and economic activity is on the rebound, but the “new normal” doesn’t mean a return to the robust job and business growth that existed early in 2020.
“After job losses of more than 22 million between February and April, by far the steepest employment downturn in history, the labor market has started to recover. The economy has added back nearly one half of those lost jobs, but job growth will slow going forward. Unemployment will remain elevated for years to come as business owners continue to deal with the impacts of the pandemic,” Faucher said, adding that technology may be the key to business survival and that the PNC survey showed that many owners are making the necessary investments.
Other key survey findings include:
- PPP a Much Needed Lifeline: Nearly all who applied for a Paycheck Protection Program loan consider the funding important (97%), and nearly seven in 10 said it was extremely important. Of those who applied, nearly 90% were approved. A majority (55%) said additional government stimulus funding is important for their business, with a third (32%) indicating it is extremely important.
- Economic Hopes Dim: Business leader reaction to the COVID-19 pandemic and related economic conditions caused the steepest six-month decline in optimism in the 17-year history of the survey, dropping by half from Spring 2020 to just 21% reporting optimism about the national economy. While the drop is one of the sharpest in survey history, optimism remains higher than it was during the Great Recession between 2008 and 2013, when it was in the single digits.
- Election Edification: Among those business owners expressing a partisan preference in the upcoming presidential election, 76% of Donald Trump supporters and 49% of Joe Biden supporters believe that their candidate of choice would have a positive impact on their own business if elected to the office.
The PNC Economic Outlook survey was conducted by telephone from Aug. 1 to Sept. 8 among small and mid-sized businesses with self-reported revenue of $100,000 to $250 million. Five hundred interviews were conducted nationally. Sampling error for the nationwide results is +/- 4.4% at the 95% confidence level. The survey was conducted by Artemis Strategy Group.