More than 80 percent of business owners say they’ll need 50 percent or more of their usual customer base each month to break even after COVID-19 closures, according to a New Jersey Business & Industry Association Business Recovery Survey checking on how members’ business model would fare in a statewide soft opening.
If a soft opening allows a 50 percent partial reopening of businesses in the state, 23 percent of respondents said it would take them more than a year to generate revenue comparable to pre-pandemic profits. A smaller percentage, 6 percent, said it would take more than two years to generate comparable revenues. While 51 percent of businesses anticipate spans of months up to a year to generate pre-COVID-19 profits operating at 50 percent capacity, 21 percent don’t expect to be able to generate comparable profits at that capacity.
“The results of this survey put a finer detail on the true challenges that lie ahead, even with a soft opening at 50 percent capacity, as we work toward a recovery and reinvention framework for New Jersey’s economy,” said NJBIA President and Chief Executive Officer Michele Siekerka in a statement.
“Some of our additional data focusing on revenues and financial assistance also reveal great challenges. However, now knowing the true needs and concerns of our businesses in even a partial re-opening allows us to work toward solutions and an effective plan of action for the reopening of our economy,” Siekerka said.
For business to operate productively, 27 percent of respondents said that they need 100 percent of their in-person workforce. Thirty-five percent of respondents need under 50 percent of their in-person workforce to be productive, and 38 percent need between 50 and 99 percent for productivity.
Employers were asked to list the top three struggles for their businesses. Meeting payroll cost (59 percent) was the highest, while paying rent (44 percent) and ensuring worker safety (22 percent) were second and third, respectively. Twenty-one percent of employers expect handling supply chain disruptions to be within their top three struggles, 20 percent included making quarterly tax payments in, and 19 percent included paying payroll taxes.
Other struggles yielding 12 percent or less included making quarterly or annual corporate business tax and gross income tax payments; complying with labor mandates; the cost of maintaining equipment; finding enough employees to fill workplace needs; and concerns about future lawsuits.
When asked if their their business could operate under Centers for Disease Control and Prevention social distancing guidelines, 70 percent said yes, while 19 percent said they were not sure, and 10 percent said they wouldn’t be able to operate under those guidelines.
“It’s a positive to see the capability and willingness of employers to operate with appropriate social distancing,” Siekerka said in a statement. “What remains to be seen is what entry limitations will be put on businesses, and whether customers will have the same initial willingness to patronize out of health concerns.”
When asked how or if their physical workspace might be affected as a result of COVID-19, only 7 percent anticipated the need for structural changes to implement social distancing. Twenty-nine percent said their workspace will not be impacted, 23 percent expected increased costs for sanitizing, and 20 percent expected added costs for personal protective equipment. Only 7 percent said they would need structural changes to implement social distancing.
While many businesses report an ability to adapt, two-thirds of said they experienced a decrease in revenue due to the current pandemic, while 27 percent reported no revenue. Only 5 percent of businesses reported normal revenue.
About one-third of respondents have laid off at least one worker during the COVID-19 pandemic.
“It would appear there’s a correlation between the number of companies reporting no revenue to the number of companies having to lay off at least one employee,” said NJBIA Director of Economic Policy Research Nicole Sandelier in a statement. “Nearly 8 percent of respondents said they have let go of 10 workers or more, which relates to some of the high unemployment numbers we have seen on a state and national level.”
Just over half of respondents said they either reduced workers’ hours, or furloughed or laid-off employees to accommodate for lost revenue.
Of the 36 percent of respondents who had to close as a result of a COVID-19 related executive order, 3 in 10 of those weren’t sure if they would ever reopen.
Of those that had to close their premises, 7 in 10 said they were operating remotely, experiencing financial losses. Ten percent said they were continuing normal operations.
One in 4 businesses reported they were unable to perform their essential business duties, and 54 percent of respondents listed their business as struggling to perform essential duties.
The three Ps
Regarding federal Paycheck Protection Program loans, 74 percent of those surveyed applied. As of when they were surveyed – between April 23 and 28–, 65 percent said they had not yet received funding while 30 percent said they had. Five percent reported that they were not approved.
A little more than 98 percent of employers reported that they would put PPP money toward payroll costs, while 68 percent said they would apply some funds to utilities, 66 percent said they would apply some funds to rent, and 15 percent said they would apply some funds to mortgage interest.
Of businesses who reportedly applied for a Small Business Emergency grant or loan from New Jersey Economic Development Authority, 78 percent had not received their funds as of when they were surveyed.
The 1,359 respondents were comprised of NJBIA members and also members from other partnering business associations in the New Jersey Business Coalition.