Forty-four percent of the 31.7 million small businesses in the United States are at risk of closing by the end of the first quarter due to the enormous economic crisis the country is experiencing. The pressure is a result of the CCP pandemic and progressive policies aimed at generating higher unemployment, inflation, and higher taxes, according to a survey conducted by the U.S. small business group known as Alignable.
Alignable’s report concluded the current crisis is pushing some 13.9 million small businesses into a critical situation. They are at serious risk of closing their doors by April 1 in the United States.
Alignable is the largest online referral network for small businesses with more than 6 million North American members. To help illustrate the severity of the current problem facing American businesses, the group conducted a first-quarter revenue survey, which shows that 44% of small and medium-sized enterprises (SME) are concerned that they will not be able to earn enough revenue by the end of this quarter to stay afloat.
The revenue survey conducted between January 28 and February 15 asked two key questions that helped determine the percentage of businesses at risk of closing for good by March 31, 2021.
The survey was conducted among a total of 6,029 representative small business owners and asked:
What percentage of revenue/sales from the first quarter of 2020 do you anticipate by the first quarter of 2021?
What percentage of Q1 2020 revenue/sales do you need to achieve by Q1 2021 to stay in business?
When analyzing the answers to these two questions, it turns out that 44% of respondents do not expect to achieve enough revenue in Q1 2021 to cover the costs necessary for their business to remain profitable.
Examining the different sectors of the economy, we find that restaurants/bars topped the list of those most affected. Similar conditions to those of restaurants are evident in tourism, event organization, and gymnasiums.
Overall, 55% of respondents said they would run out of cash reserves by the end of the first quarter. Of that group, 15% said their available cash was already gone.
Meanwhile, companies like Walmart and Amazon were able to generate record revenues in 2020. Amid the pandemic, 45 of the 50 most valuable public corporations profited, even as the U.S. unemployment rate jumped to a record 14.7%.
“These are times when the strong can get stronger,” Nike CEO John Donahoe admitted on a September conference call, The Wall Street Journal reported.
In this sense, it is difficult to understand the progressive policies of the new Democratic administration. It has introduced measures to increase public spending and impose an increase in the minimum wage of almost 50%. That will translate into a logical increase in taxes and an increase in companies’ wage costs—precisely the opposite of what SMEs need at this time to survive the crisis.
At the same time, energy policies aim to reduce oil production, which is already causing an inevitable increase in fuel prices that will quickly translate into inflationary increases. The last thing small producers need.