Bredin Report: How COVID-19 has Afflicted SMBs

How COVID-19 has Afflicted SMBs

We recently fielded an SMB Pulse survey of 500 principals of U.S. companies with up to 500 employees. Among other things, we wanted to understand the current impact of the COVID-19 pandemic on SMBs. We asked about a variety of topics: inflation, supply chain, staffing, vaccination and return to the office.

In a word, the impact is huge, even eighteen months after the pandemic began. For example, over half of respondents – 57% of very small businesses (VSBs, with 1-19 employees), 51% of small businesses (SBs, with 20-99 employees) and 56% of mid-sized businesses (MBs, with 100-500 employees) – have been negatively impacted by the prices of the things they buy. With inflation at a 39-year high, many SMBs are facing serious challenges managing expenses.

One profitability management tactic, of course, is to pass cost increases along to customers. Slightly less than half (45%) of VSBs have done so, compared to over half of SBs (57%) and MBs (56%). Since fewer of them are increasing their costs than their larger peers, VSBs may be even more profit-challenged in 2021 than is often the case.

Supply chain issues further complicate the SMB operating environment. 44% of VSBs, 52% of SBs and 65% of MBs have been negatively affected by limited availability of inputs like raw materials or parts. Supply shortages from computer chips to plastics to building supplies to coffee – and even the shipping containers they’re transported in – can cause significant topline and cash flow impacts.

In addition to inputs, labor constraints are also a huge drag on SMB performance. For example, over half (55%) of MBs have been negatively affected by an inability to hire good job candidates. The impact is less dire but still significant among SBs (45%) and VSBs (22%). The strong job market is even leading to job candidates ‘ghosting’ employers – affecting roughly one in five VSBs, and roughly two in five SBs and MBs.

Effect of COVID-19 on SMBs

Effect of COVID-19 on SMBs by Company Size


As if price and supply issues weren’t challenging enough, employee vaccinations have bedeviled SMBs, especially larger ones. Only one in seven VSBs has had significant issues with employees resisting vaccination, but roughly one in three SBs has, and one in two MBs. Whether it is a vaccination policy they have set themselves or one that has been set by a local government, small business owners are involuntarily on the frontlines of balancing individual preferences with employee, customer and community health.

Finally, with many SMBs moving to a ‘permanent remote’ work status, or at least reducing the number of employees working onsite, a significant percentage are abandoning work locations such as offices. This is only the case with one in six VSBs, although with millions of businesses of that size around the country, that equates to significant commercial space vacated as a result of the pandemic – not counting the 24% of SBs and 38% of MBs who have also cut back on commercial space.

Need help understanding and/or engaging SMBs? Bredin can keep you up to date on evolving SMB needs and challenges through quick-turn, actionable market research. We can also help you develop high-value content and social posts to boost SMB awareness, brand perception, leads, conversion and revenue.

About Bredin

Bredin was founded in 1991 by America's foremost small business expert, author and syndicated columnist Alice Bredin. From its beginning, Bredin was designed to be a breed apart: 50% research consultancy, 50% creative agency, 100% focused on SMB. Based in Somerville, Mass., Bredin helps Fortune 500 companies understand, reach and retain SMB customers through timely, targeted research and award-winning marketing programs.