Poll: Massachusetts small businesses still recovering from COVID; half say revenues still down, inflation struggles continue.
Businesses owned by entrepreneurs of color see expansion opportunities if capital and space challenges can be overcome.
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A new statewide survey commissioned by Coalition for an Equitable Economy (the Coalition) in partnership with The MassINC Polling Group (MPG) and Mass Growth Capital Corporation (MGCC) finds Massachusetts small businesses facing a long road to recovery from the COVID-19 pandemic, with about half (53%) reporting revenues remain lower than pre-pandemic. Business conditions are toughest for the state’s smallest businesses, which are more likely to be owned by women or people of color. They are less likely to say current business conditions are “good” and more likely to have past due bills.
About 80% of small businesses report receiving at least some form of COVID funding, though the smallest businesses and Black and Latino-owned businesses were more likely to miss out entirely (see chart). These same businesses report the greatest struggles with accessing capital to run or grow their business.
These are some of the key findings according to the second major survey of 3,243 Massachusetts small businesses (500 employees or fewer) released today by the Coalition for an Equitable Economy. The Coalition conducted a similar survey in 2020 to assess the impact of the pandemic on the state’s small businesses. The new survey went deeper on key topics impacting businesses, including a focus on current needs, procurement and access to capital and other resources. The survey was distributed by the Coalition, MGCC and a large group of business and community organizations across Massachusetts. It targeted oversamples of businesses owned by women and people of color. In all, these oversamples included respondents from 501 Black owned businesses, 353 from AAPI-owned businesses, 443 from Latino-owned businesses, and 2,082 from women-owned businesses.
“This survey offers an incredibly nuanced and granular look at small businesses in Massachusetts,” said Steve Koczela, President of The MassINC Polling Group. “Knowing these details about how different businesses are faring will help economic and policy leaders respond to the challenges small businesses are facing.”
The poll will be released during a virtual forum on Thursday September 22, 2022, from 1:00 – 2:30pm, moderated by Coalition’s Executive Director, Tracye Whitfield. In addition to a slide presentation of the survey’s key findings by MPG President Steve Koczela, the forum will include comments from Housing and Economic Development Secretary Michael Kennealy, and Massachusetts Senator Adam Gomez, himself a former small-business owner. A question-and-answer session will follow.
These struggles come against a backdrop of an economy in transition to an era of greater small business diversity. Among white owned businesses, 23% say a key leader is planning retirement and 24% say they are planning a sale of the business, both higher than the share for businesses owned by people of color. At the same time, businesses owned by entrepreneurs of color are more likely to be seeking capital, planning expansion, and looking for additional space than are white owned businesses.
Expansion plans are complicated by the precarious position many businesses owned by entrepreneurs of color report and the challenges of accessing resources for expansion. Accessing capital was a “major concern” for Latino (88%), Black (85%), and AAPI-owned businesses (77%) than for white owned businesses (55%). Among those who applied for new funding, businesses owned by entrepreneurs of color are more likely to report a whole range of challenges in applying for loans, and less likely to receive the full amount of their application.
The broader economic environment continues to be a problem with inflation atop the list of entrepreneur concerns (see chart below). Larger businesses are better positioned to deal with inflation, with businesses with revenues over $500k far more likely to report increasing both wages (73%) and prices (69%) than are those under $100k (40% and 29% respectively). Other challenges varied between businesses of different sizes, with hiring and supply chain difficulties cited as key issues for larger businesses. For smaller enterprises, capital access and a drop in customer traffic are more common problems.
The survey also looked at a range of possible supports that could help businesses recover and move forward. Access to grants and new revenue sources were the top needs for small businesses, followed by assistance with social media and marketing.
Businesses were also asked about their experience working with “anchor institutions” such as hospitals, universities and large corporations. Doing business with anchor institutions is more common among larger businesses. Key barriers to more work with them include administrative burdens of large procurement, the complexities of finding such work, and contracting processes.
Remote work has been a key challenge to businesses particularly in urban areas where foot traffic and commuters used to represent a major share of customers. In terms of their own employees, most small business employees work onsite (73%), and expect that level to remain in the year ahead.
About the Coalition for an Equitable Economy: The Coalition for an Equitable Economy (CEE) was formed in 2020 with a mission to ensure equitable access to capital, business networks, education, technical support and other resources for Black, Latino, immigrant and low-income small business owners in Massachusetts. CEE’s membership includes leading statewide organizations like the Black Economic Council, Amplify Latinx, Massachusetts Association of Community Development Corporations, Local Initiatives Support Corporation, Foundation for Business Equity along with dozens of community-based organizations, CDCs, CDFIs and others who work with small businesses across the state.
About the MassINC Polling Group: The MassINC Polling Group is a nonpartisan public opinion research firm serving public, private, and social-sector clients. MPG elevates the public's voice with cutting-edge methods and rigorous analysis. Based in Boston, MPG serves a nationwide client base.
About Massachusetts Growth Capital Corporation (MGCC): Massachusetts Growth Capital Corporation (MGCC) The purpose of MGCC is to create and preserve jobs at small businesses, inclusive of those owned by women, minorities, immigrants and veterans. MGCC also works to promote economic development throughout the Commonwealth, with special attention to business needs in underserved areas, Gateway Cities and low to moderate income communities.
About the Poll: These results are based on a survey of 3,243 small business leaders (with fewer than 500 employees) in Massachusetts. The survey fielded from June 30 - August 9, 2022, during which small businesses were contacted by a network of sponsoring and participating organizations and invited to complete an online survey. The survey was offered in English, Spanish, Portuguese, Mandarin, and Haitian Creole. The final survey data was weighted to estimate population parameters by race and gender of the business owners, based on data from the U.S. Census and the Small Business Administration. The survey was conducted by The MassINC Polling Group and sponsored by the Massachusetts Growth Capital Corporation. The survey was sponsored and distributed by a large group of business and community organizations across Massachusetts. Support for respondent incentives was provided by The Harvard T.H. Chan School of Public Health.