Businesses face challenges; it comes with the territory: unqualified hiring pools, broken communication across teams, and demanding clients, for example. However, the COVID-19 pandemic presents a novel crisis: Business owners are dealing with a fast-moving virus that has already claimed hundreds of thousands of lives worldwide and left many Americans unemployed.
Although COVID-19 relief packages and resources are lessening the impact for many business owners, the pandemic raises a critical question: How will they move forward? To understand how companies plan to navigate the future beyond COVID-19, we surveyed 502 business owners about preparing for future crises. Continue reading to explore our findings.
Businesses’ Responses to COVID-19
It’s likely that humanity as a whole will learn a lot from this pandemic, and many business owners reported already learning a lesson about preparedness: 53.8% said they intend to create a crisis management plan after the COVID-19 pandemic has passed to help steer their business through future crises.
While a majority of business owners in each age group reported they’ll be preparing more for the next crisis, those in their 30s were most likely to say they’ll be making a crisis management plan post-pandemic.
Older businesses – ones that were more than 6 years old – were slightly more likely to say they’ll be putting together a plan for their team than younger businesses (57.9% compared to 51.4%). However, older businesses were more likely to have already had a crisis management plan prior to COVID-19.
A majority of the business owners we surveyed said they were unprepared for the financial fallout caused by the coronavirus pandemic. Consequently, financial preparations and contingencies were high on the list of things business owners said they would be doing to prepare for future crises.
Nearly 65% of business owners said they’ll work on building an emergency cash reserve to help them handle future crises. The second most common planned action step was finding new sources of revenue (51%), followed by identifying ways to cut costs (32.9%), and reducing debt (22.9%).
Addressing Future Crises
While most business owners reported they’d take some kind of action to help their business better weather future disruptions, different strategies and priorities emerged based on the age of business owners and the age of the businesses.
While a majority of business owners reported prioritizing an emergency cash reserve regardless of age, owners aged 40+ were most likely to say they’ll seek out new revenue streams post-pandemic. Meanwhile, business owners in their 20s were most likely to say they’ll be looking for ways to cut business expenses after COVID-19.
Differences emerged based on the age of businesses as well. Older companies were 2.2 times more likely to indicate they’d create a crisis handbook for employees. According to CNBC, “one of the most important things [employers] can do [in a crisis] is communicate with [employees].” Younger businesses, on the other hand, were slightly more likely to say they would work to reduce business debt and look into transitioning to a fully remote organization. The pandemic has put a spotlight on remote work, with Gallup calling this global shift “the world’s largest work-from-home experiment.”
Business Owners Will Endure
According to the World Economic Forum, organizations with strong digital roots have adapted better to the COVID-19 pandemic compared to those without digital footing. However, no matter the state of an organization’s digital affairs, it is recommended that all companies come up with a post-pandemic strategy.
Not positive your business will pull through? Interestingly, our findings show that an equal amount of businesses with and without a crisis management plan prior to the pandemic were extremely confident their business would survive (26.7%). However, organizations without a plan were twice as likely to report being not at all confident about their survival prospects.
Pandemic Shifts Business Management
Businesses have faced a newly uncertain climate since the World Health Organization declared COVID-19 an international emergency on January 30, 2020. Although big tech has thrived, our findings show that a significant percentage of business owners felt unprepared to deal with a pandemic, and an overwhelming number had no crisis plan.
Whether your company fully transitions to a remote office or ideates to uncover new sources of revenue, Paychex will remain by your side. As the COVID-19 pandemic continues to present current challenges, our website remains a resource. For more personalized guidance, please contact your Paychex representative, visit our Coronavirus Help Center, or reach out to us through one of the following support options:
We surveyed 502 current business owners between April 14, 2020, to April 15, 2020, on the impacts of the COVID-19 pandemic and how they have adjusted their businesses to handle the pandemic’s effects.
Respondents were 57.3% women and 42.7% men. One respondent identified as nonbinary. The average age of respondents was 35.9 with a standard deviation of 10.5.
Respondents were asked to report how prepared they were in general for the impact the coronavirus pandemic had on their business. They were given the following scale of answer options:
- Completely unprepared
- Somewhat unprepared
- Neither prepared nor unprepared
- Somewhat prepared
- Completely prepared
In our final visualization of the data, those options were combined into three broad groups for clarity: unprepared, neither unprepared nor prepared, and prepared.
Respondents were also asked about how financially prepared they were for the impact the coronavirus pandemic had on their business. They were given the same scale of answer options, and they were also combined into the same three broad groups in our final visualization of those data.
When reporting both the actions they had taken in response to the COVID-19 pandemic and the actions they planned to take once the pandemic had passed, respondents were given check-all-that-apply answer options. Therefore, percentages for that information will not add to 100.
Business owners were asked how many days they could keep their business open and continue to pay business expenses if the business stopped bringing in money. Averages were calculated to exclude outliers. This was done by finding the initial average and standard deviation. The standard deviation was then multiplied by three and added to the initial average. Any data point above that sum was then excluded.
The data we are presenting rely on self-report. Common issues with self-reported data include, but are not limited to, selective memory, telescoping, attribution, and exaggeration.
No statistical testing was performed, so the claims listed above are based on means alone. This content is purely exploratory, and future research should approach this topic in a more rigorous way.
Fair Use Statement
There’s no doubt that recent events and the current state of the economy have been difficult for businesses of all kinds to navigate. If someone you know would benefit from the information in this project, you are free to share for any noncommercial reuse. Our only request is that you link back here so people can view the entire project and review the methodology. This also gives credit to our hardworking contributors for their efforts.
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