For nine years, Thumbtack has conducted an annual Small Business Friendliness Survey. The survey gives small business owners who use Thumbtack the opportunity to grade their state and local governments on how friendly they are to business, measuring things like regulations, taxes, and training and education opportunities.
But 2020 is different.
This year has been a roller coaster as small businesses across the country faced economic uncertainty and the challenges of operating during a global pandemic. So for 2020, we decided to focus on how small businesses are weathering the storm and how they perceive local, state, and federal governments are responding to the pandemic. Small business owners provided scaled feedback and states with the highest average scores received “A+” grades and those with the lowest average scores received “Fs”.
These small businesses — plumbers, landscapers, photographers and tutors — are central to our communities. They form a critical sector of our economy and understanding how COVID-19 has impacted them is crucial. When we learn what they expect from local, state and federal governments, we can take steps to support them in their recovery.
We heard from over 2,400 small business owners in all 50 states. Here’s what they said.
The federal government fails
Small business owners nationally gave local governments their highest marks, averaging a “C+,” followed by state governments, averaging a “C”. But these scores were significantly higher than those given to the federal government.
Overwhelmingly, small business owners shared that they think the federal government has done a poor job responding to the pandemic. They gave the federal government an “F” for their overall response, a slightly better “D+” for supporting small businesses and an “F” for the actions the government has taken to protect public health.
How the states scored
Small business owners shared strong feelings about their states’ response to the pandemic. But these feelings varied, with respondents in some states feeling overwhelmingly satisfied with the response, and others feeling very unsatisfied with their states’ actions (or lack thereof) in addressing the pandemic.
On average, states that took more aggressive actions to temporarily close down public spaces and enforce recommended distancing guidelines received higher scores than states that chose to re-open earlier.
You can see the full set of scores below:
The top scoring state in this year’s rankings was Vermont, receiving an “A+,” followed by Rhode Island “A”, Connecticut “A”, Massachusetts “A” and Maryland “A-”.
The lowest scoring states were Arizona, Oregon, Missouri, Georgia and Tennessee, all receiving an “F”.
How the states responded to COVID-19
Across the country, small business owners reported that controlling the virus was crucial to re-opening the economy. Many shared that stay-at-home orders, which some states began rolling back in late April, were lifted too soon.
Small business owners had mixed opinions regarding their states’ priorities in issuing guidance and orders. Some small business owners felt their states had found the right balance between prioritizing public health and re-opening the economy, while nearly equal proportions of small business owners felt their states had prioritized one or the other.
Impact on small business
The majority of small businesses in the survey reported that the pandemic has hurt their business. Compared to the same time frame last year, 65% of surveyed businesses saw their revenue decline from March 2020 through June 2020.
But they also shared their stories of adapting, and took a variety of actions in order to keep their businesses afloat.
- 17% shut down their business entirely for a period of time
- 13% offered remote services for the first time
- 11% stopped advertising to save money
- 10% lowered their prices to attract new customers
- 8% expanded their service area to reach more potential customers
Danielle, a photographer in hard-hit Southern California, shared how resilience is a fundamental part of being a small business owner: “Growing up in Florida and being around tropical storms and hurricanes taught me to always prepare for the worst and hope for the best through any challenge. We will all grow from this. COVID has changed us all. I hope we will now prosper even more and turn our sights to challenging ourselves and everyone around us to become better and stronger business owners and influencers.”
What small businesses need from government
The small business owners in the survey reported that the government programs, while helpful to some, did not help the majority of respondents.
Just over one-third (34%) of the small businesses surveyed said that they had applied for federal small business loans like the Paycheck Protection Program or the Economic Injury Disaster Loans offered through the Small Business Administration.
Of the 66% that didn’t attempt to apply for federal small business loans, they reported a variety of reasons why.
- 36% did not think their business would qualify for federal support
- 34% said their business did not need a loan to survive
- 11% couldn’t find the information to figure out what programs were available
- 5% thought the application process would be too burdensome
The early news reports of large corporations getting PPP loans and the well-publicized problems with backlogs and oversubscribed banks may have contributed to this significant portion of businesses who were discouraged from applying.
Small business owners also shared which actions they thought would be most helpful to their recovery:
- 26% more stimulus checks so customers have money to hire
- 20% tax breaks or deferrals for small businesses
- 18% better public health guidance on COVID-19 risks
- 18% getting people back to work
As the federal government continues to adapt programs to help small businesses survive, we urge them to expand efforts to explain the availability and eligibility of programs, and continue efforts to streamline and automate applications and forgiveness processes.
Thumbtack will continue to partner with organizations like the Chamber of Commerce to inform small businesses of options for federal support and highlight state and municipal programs to aid local businesses.
Who is the small business owner
The small business owners who participated in the survey represent the breadth of local service professionals across the country, spanning different industries, from home construction to health and wellness and events professionals, bridging diverse political ideologies and differing stages of entrepreneurship. Check out the type of professionals who use Thumbtack below.