1 In 5 CA Businesses Remained Closed In February: Facebook

CALIFORNIA — One in five California small businesses surveyed by Facebook in February remained closed, according to a recently released report.

Facebook also found that three in five small businesses reported seeing a year-over-year drop in sales for February 2021. A third of businesses surveyed said they were employing fewer people as a result of the pandemic.

Seven in 10 California small businesses told Facebook they were confident in their ability to keep their doors open for another six months, while one in five anticipated that they would experience cash flow-related issues.

These are among the findings included in the latest Global State of Small Business report, compiled through research conducted by social media giant Facebook.

This year’s report highlights the immense toll the pandemic has taken on small businesses, especially those owned by women and people of color.

This report surveyed 35,000 small businesses across 27 countries and territories in February 2021. Facebook partnered with the Small Business Roundtable to compile its U.S. data.

Like California, more than 1 in 5 small businesses nationwide — or 22 percent — reported they were closed in February 2021, an increase from 14 percent in October 2020. In this case, a closure was defined as a business that was “non-operational” or not generating any revenue. The report did not distinguish whether the closures were permanent or temporary.

Compounding the closures, just over half of U.S. small business owners reported a drop in sales in January 2021 compared with January 2020.

Here are some other nationwide findings highlighted in the report:

• Just over half of those surveyed were confident in their ability to continue operating for at least six months if the pandemic and current conditions persist. A similar proportion said they didn’t plan to rehire laid-off or furloughed employees in that time, either.

• Perhaps unsurprisingly, a greater number of women-owned businesses in the United States reported a drop in sales this year — 54 percent compared with 47 percent of men-led small businesses.

• More than half of U.S. minority-led businesses reported a drop in sales compared with the previous years — 6 percentage points higher than other small businesses.

• Almost two-thirds of Black-led businesses and 46 percent of Hispanic-led ones reported a more than 50 percent drop in sales.

The most small-business closures were reported in New York (31 percent), Pennsylvania (31 percent), and Massachusetts (30 percent.)

By contrast, the fewest closures were reported in Maine (9 percent), Idaho (9 percent), and Colorado (10 percent).

Sheryl Sandberg, chief operating officer at Facebook, said in a statement the report is a “timely reminder” that many small businesses are “still vulnerable and in need of support.”

“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,” Sandberg said.

Read the full Global State of Small Business report online.