As the National Small Business Week Virtual Summit winds down, a new report reflects growing optimism among S.C. small businesses, while another study points to a continued labor shortage in the state.
Following up on a February survey, Facebook’s September Global State of Small Business Report found that 73% of S.C. small business owners are confident in their ability to stay open for at least 12 months, 9% higher than the national average and an 11% increase from February numbers. Higher sales were reported by 52% of state businesses, a 23% increase since February.
The results, based on a survey conducted between July and August with responses from 35,189 business leaders across 30 countries and territories, also show that S.C. women-owned businesses are faring better than earlier this year, with 43% reporting higher sales. Worldwide, both men- and women-led small businesses reported a 28% increase in sales performance in the last 30 days.
In addition to the February survey, Facebook collected data six times throughout 2020 as the COVID-19 pandemic left many business owners searching for customers and revenue.
“At every single point, the self-reported optimism for small businesses has actually been pretty high, but you are seeing some really strong numbers from South Carolina,” said Diana Doukas, manager for economic impact at Facebook.
A study released today by CareerCloud, however, pointed to a continuing labor shortage in the state. The study, using data from the Bureau of Labor Statistics and online job platforms Indeed, ZipRecruiter and CareerBuilder, found that South Carolina ranks 23rd in the country with 0.93 job openings per unemployed person.
Nationwide, the study found that while the number of unemployed Americans fell to 8.3 million through Sept. 8, a record 10.9 million jobs remained unfilled.
“It’s been difficult since March 2020 for small businesses,” said Frank Knapp, president and CEO of the S.C. Small Business Chamber of Commerce. “A lot of them got through it OK. A lot of them didn’t. A lot of them have gone out of business. That especially impacted minority business owners and women.”
The Facebook study found that global closure rates among small business fell to 18% from 24% at the start of 2021, but remained higher than the 16% reported in October 2020. Worldwide, 52% of businesses continued to report a decrease in sales.
In the U.S., closure rates dropped to 16%, with 34% of small businesses reporting lower sales than a year ago. But minority-led small businesses were more likely to report closures (20% to 13%), a drop in sales for the most recent 30-day year-over-year period (44% to 29%) and reduced employment (32% to 20%) than other businesses. Hispanic-led small businesses had the U.S.’s highest closure rate at 24%, while Black-led businesses reported a 22% closure rate.
The biggest concerns facing small businesses worldwide are lack of demand and cash flow, with 35% and 33% of respondents in the Facebook study, respectively, highlighting those issues.
“Access to capital — how many decades have we been talking about that?” Knapp said. “You look at the data and you figure out why. We have 68% fewer banks in this country than in 1980. With fewer banks, you have more demand at those banks. What for-profit bank or credit union for that matter wants to make a $10,000 startup loan?”
Knapp said that while Community Development Financial Institutions, chartered to lend to underserved communities, can help expand access to capital for small businesses, the U.S. Small Business Administration could play a bigger role.
“Let them take the risk and then farm out the administration to a CDFI,” Knapp said. “Give the SBA a pot of money every year from Congress, say $3 billion, (and) say, ‘OK, SBA, your job is try to make some sort of responsible way of deciding who wants a startup loan, say under $20,000, and they would be in underserved communities.’ … We need another entity that is going to make these small, risky loans.”
A resource small businesses are using in larger numbers to combat challenges is increasing their digital presence, according to the Facebook survey. The study found 88% of small businesses were using digital tools, comparted to 81% at the start of the year. In South Carolina, 45% of small businesses reported that at least a fourth of their sales came from their digital presence, a jump of 7% since February.
Facebook has “doubled down” on efforts to boost that growth, Doukas said, providing $100 million in cash grants and ad credits to businesses in more than 30 countries through its Small Business Grants Program. On Oct. 1, the company will launch a receivables program called Invoice Fast Track, in which Facebook will commit $100 million to buying up outstanding invoices from around 30,000 women- and minority-owned businesses to allow owners faster access to capital.
“That turnaround time between receiving payment for an invoice for the work you’ve done can really be a struggle for small businesses,” Doukas said. For a fixed fee, “Facebook will turn that invoice around very quickly in a matter of days. You have access to that money. When third-party entity pays you back, we work with a partner to use that money to go back into the sustainable fund to continue to support small businesses.”
Facebook will also soon launch the Good Idea Exchange, Doukas said, which will promote interaction and conversation between small businesses and industry leaders. The company also offers personalized advertising and tools such as its online shops, customizable ecommerce sites on Facebook and Instagram where businesses can highlight up to 30 products and transactions can be conducted onsite.
“Before the pandemic, there was foot traffic. You could rely on the person walking into your store,” Doukas said. “Then to have to transition online, to create something very similar, you needed to find alternative ways to communicate to your customers.”