(Photo by Pexels user Tim Gouw, used under a Creative Commons license)
It’s been over a year since the COVID-19 pandemic came to the U.S. and jolted the economy. How are business owners faring, and feeling, now?
From Jan. 25 to Feb. 10, Wilmington Trust conducted its quarterly Business Owners’ Outlook survey of almost 2,000 biz leaders on the state of their companies and the impacts of the pandemic. That included many in Delaware, Philadelphia and Baltimore, specifically focusing on those with revenues of $1 million to $4.9 million, and $5 million and up.
What they found was inequity, digital burnout and a rush to retirement.
Confidence in the U.S. economy has dropped by nearly a third compared to its 2020 survey, with just 34% of business owners believing that they will be able to achieve their long-term goals.
Inequity in Paycheck Protection Program (PPP) funding was apparent, even at the $1 million-plus level.
“The challenges faced by women and EOCs were, unfortunately, not unique to PPP,” said Detra Miller, head of minority- and women-owned business banking for M&T Bank, in one of the report’s Q&As.
Of those surveyed, 228 owners of the 1,007 businesses with revenues up to $4.9 million identified as an entrepreneur of color, or EOC.
“In normal times, these groups have historically faced obstacles in gaining equitable access to capital, career connections and a strong banking relationship,” she said. “Because of the unconscious and conscious biases that persist in society, many of these businesses have struggled to build the financial cushion to survive the economic impact of the pandemic.”
One of the issues, Miller said, was that PPP was initially structured to exclude sole proprietors, independent contractors and self-employed individuals — 70% of which are owned by EOCs and women.
The survey also found wide gaps between EOCs and non-minority owners (NMOs), especially when it comes to valuing diversity in the workplace. While a majority of NMOs (70%) said they value diversity and inclusion in their workplace, it was more than 20 percentage points lower than the number of EOCs who said it was important (92%).
Early retirement plans have doubled
In the Business Owners’ Outlook survey from August — well into the pandemic — only 4% of owners with $1 million to $4.9 million said they had plans to retire early. By January, that number had doubled to 8%. For owners of larger businesses, that number jumped by 110%, from 10% to 21%.
At the same time, confidence that the business will be well-managed after they retire has dropped, from 50% in March 2020 to 40% in August 2020 to just 34% in January.
“Exhaustion may be playing a significant role in the growing interest in transition. After making it through the pandemic, enough may be enough for some owners,” said Stuart A. Smith III, national director of business value strategies for Wilmington Trust and M&T Bank, in a report Q&A. “Dealing with two major economic events in less than 15 years may have them wondering if it’s time to take money off the table, especially as they near retirement.”
Trade policy concerns drop
While anxiety about personal and corporate taxes has increased, there are two areas where anxiety has actually gone down since last year: trade policy and competition, which have fallen from 26% to 18% and 39% to 27% respectively.-30-
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