The impact of the economic crisis on small businesses

hard times, economic crisis

Small businesses are the heart of our communities – and bring economic opportunities with jobs and commerce. From cafes, gyms and fashion designers to plumbers and tour operators, small businesses account for nearly 98 per cent of all Australian businesses. But these are extremely challenging times, and the COVID-19 pandemic presents not just a public health emergency, but also an economic crisis that is hitting small and medium-sized businesses hard.

The scale of the challenge they face is outlined in the Global State of Small Business Report, compiled by Facebook in partnership with the World Bank and the Organisation for Economic Co-operation and Development (OECD). It is the first in an ongoing series of reports that were planned before COVID-19, when we had anticipated the initial report would have painted a much brighter picture. Instead, what we found from surveying over 30,000 small-business leaders from more than 50 countries is a sobering picture.

Of the Australian small businesses surveyed, we found the biggest issue concerning them was cashflow, with 56 per cent of Australian respondents saying they expect cashflow to be a challenge over the next few months. Well over half (66 per cent) of Australian businesses surveyed, also reported that sales were lower this year when compared to the same time as last year, which has led to 31 per cent of Australian businesses surveyed having to let go of staff.

It also exposes a stark gender disparity. In Australia, only 70 per cent of female-owned small businesses remained operational during the survey period, compared to 80 per cent of male-owned small businesses. Female operated businesses were significantly more likely to be concentrated in sectors most affected by restrictions including tourism, retail and hospitality. 

At Facebook, our goal is to deliver value to small businesses by democratising access to national and global economies. More than 160 million businesses use Facebook, Instagram, Messenger, or WhatsApp every month to reach customers, sell and grow. They are the heartbeat of Facebook’s community and since the early days of the pandemic we have taken steps to help them weather the storm.

Entrepreneurs are resilient and creative people, and despite the many challenges facing small businesses, we know that Australian small businesses are optimistic about the future. The path to recovery is uncertain and many may need support from governments or other institutions to get back on track. We hope this report will help identify areas where support can make the biggest difference. These are tough times for businesses all over the world, and Facebook is determined to do all we can to help them make it through. We’ve seen on our platforms the community coming together to support small businesses, whether it’s with fundraisers or shout-outs of their favourite businesses. Collectively we need to work together with the community, government and other companies, to provide the resources and support small businesses need to rebuild and recover.

Melinda Petrunoff, Director of Small and Medium Business, Facebook ANZ