The social media giant’s first-ever Global State of Small Business Report, which surveyed over 35,000 small businesses impacted by COVID-19 across 27 countries, finds that the Empire State and Keystone State had the highest reported small business closure rates in the U.S. at 31% each, followed closely behind by Massachusetts with a reported closure rate of 30%.
Small businesses in smaller states fared better. Maine and Idaho reported the lowest closure rates of 9% each. Colorado, which ranks 22nd in population, was next lowest with a closure rate of 10%.
Overall, 22% of U.S. small businesses reported they were closed in February 2021, a 14% increase compared to October 2020. Globally, 24% of small businesses reported they were closed during the same period, a 16% increase. Approximately 51% of U.S. small businesses and 55% of global small businesses reported year-over-year sales declines in January.
Black-owned small businesses were more likely to report closures and lower sales (38%) compared to other small businesses (18%). Over half (54%) of small businesses led by women reported a fall in sales, compared to 47% of small businesses led by men. The gap between men and women-led small businesses was highest in Tennessee (23%), Ohio (16%), Illinois (14%), and Missouri (14%).
About 27% of U.S. small businesses and 30% of global small businesses have reduced their workforces due to the pandemic.
Approximately 32% of minority-led small businesses (Black, Hispanic, Asian-American, and other races) reported reduced employment since the start of the pandemic compared to 25% of other small businesses.
The states where small businesses reduced employment the most include New York (38%), Illinois (36%), Michigan (36%), California (33%), and Florida (32%).
Hospitality was the leading sector for closures, sales declines and workforce reductions. The sector reported a 53% workforce reduction in the United States and a 50% reduction globally.
The sector that was second in being hardest hit was manufacturing and utilities, which reported a 37% reduction both in the U.S. and globally. Next, construction, which reported a 32% global reduction and 31% reduction in the U.S followed by wholesale and retail, which reported a 32% global reduction and a 30% reduction domestically.
Sectors that saw the biggest gaps between employment reductions globally and in the U.S. include information and communications technology, which reported a 31% reduction globally versus a 21% reduction in the U.S., agriculture, which reported a 29% global reduction versus a 20% reduction in the U.S., and logistics, which reported a 28% global reduction versus a 19% reduction domestically.
Among the global and U.S. small businesses surveyed, 51% of participants said they have no plans to rehire in the next six months.
Roughly 60% of global businesses have adapted during the pandemic, with 33% of respondents updating processes for customer interaction, 26% utilizing digital tools, 22% changing their advertising strategy, 17% implementing remote work policies, 13% changing product selection and 9% changing their approach to hiring.
Black (35%) and Asian-led (34%) small businesses were more likely to report having to change their advertising strategy as a result of COVID-19 compared to 20% of other small businesses.
“While the roll-out of vaccines and the easing of lockdowns in many countries are reasons to be hopeful, our latest Global State of Small Business Report is a timely reminder that many are still vulnerable and in need of support,” Facebook Chief Operating Officer Sheryl Sandberg said in a statement. “And those feeling the impact of the pandemic the most are female and minority-owned businesses – a further reminder that whenever crises hit, it’s the most vulnerable who are always hit the hardest.”
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