Differences Abound Between Small and Large Businesses During Pandemic
Mastercard released a report to light on the impact the global health crisis – and ongoing recovery – has had on small businesses globally.
The report, Recovery Insights: Small Business Reset, reveals that sales at small- and medium-sized businesses (SMBs) lagged behind larger companies by up to 20 percentage points at the peak of the crisis.
However, spending recovered in 2021, total sales at SMBs reaching 4.5% through August 2021 year-to-date compared to the same period in 2020, while e-commerce sales went up by 31.4%.
The report identified the following trends:
- Closures: Globally, small businesses that closed early in the pandemic were about three times as likely as larger businesses to remain closed long term.
- E-Commerce: Following shutdowns, the number of small and large businesses going online in LAC for the first time went above 200% in 2020, which reflects increased demand for an online sales channel.
- Entrepreneurship: Globally, one-third more small retailers launched in 2020 than in 2019, nearly 8x the number of larger firms created.
- Sectors – Lodging, Restaurants & Groceries: Where people are traveling, the trend to stay local has benefited small lodging companies (and hurt big city large hotels).
“Supporting neighborhood businesses has been a rallying point throughout the pandemic. However, the challenges faced have been very real, due to their dependency on local markets, local supply chains and tighter cash flows,” said Bricklin Dwyer, Mastercard chief economist and head of the Mastercard Economics Institute. “But we see brighter opportunities ahead. The shift to digital opened the door to the pandemic’s silver lining: a resurgence of entrepreneurship and innovation.”