What has the impact of the Coronavirus been on businesses, and how do they plan to move forward?
Here, we’ve outlined the results of our survey designed to capture that information, as well as commentary and insight from our advisors about what the numbers mean as we try to draw conclusions about the new world that we’re doing business in. See how businesses reported their responses in the past and their outlook for the future (Sections 1 – 10) and access overarching conclusions about the information (Section 12).
While most businesses had a continuity plan, many weren’t comprehensive enough to be effective in the face of a pandemic.
Several companies have already revised HR policies and procedures, yet many continue to recognize the immediate challenge of maintaining a safe environment for employees.
Many businesses were able to receive the financial assistance they needed to withstand hardships, and most have a positive outlook on the future of their respective companies.
How is remote work impacting the way companies conduct business?
While a small portion of businesses were already conducting a remote workforce before the pandemic, many were faced with hard decisions concerning a transition to a virtual environment. At the height of the remote work environment, 75% of companies transitioned at least a portion of their work to be done virtually.
Yet, even though many businesses now have new experience with remote work and virtual environments due to the pivots they made earlier this year, many businesses don’t plan to continue with the adaptations they made to operate remotely.
Of the companies surveyed, none plan to permanently transition all of their work to a remote environment. While 44% do plan to permanently transition at least a portion of their work to a remote environment, 53% don’t plan to permanently transition any work to be conducted remotely.
How has Coronavirus impacted HR activities and employee relations?
While 36% of businesses say that they did not experience any impact on HR activities or employee relations, many other businesses have a different story to tell.
The most common pivot that companies made involved updating their sick leave policies or wellness programs (32%), while other common solutions involved instituting staffing reductions (27%) and reducing employees’ pay or schedules (25%).
55% of businesses made some sort of change regarding the way that products or services were delivered to customers, and 53% made changes to company space in an effort to promote social distancing. Many businesses also changed their business plans or forecasted projects for this year due to Coronavirus.
How has lack of access to supplies or materials impacted businesses?
When asked about threatened continuity, even with significant supply chain impacts due to Coronavirus, 80% of companies say that they did not experience a threat to business continuity because of a lack of supplies or materials. Of the 20% of businesses that did cite threatened business continuity, most attributed the threat to the unavailability of supplies themselves or a significant delay in shipping and order fulfillment times.
How prepared were businesses to respond to and adapt in light of a pandemic?
When asked about continuity plans, 66% of businesses said that they did have a business continuity plan in place before the pandemic, yet 76% of those businesses that had a continuity plan say that their plan didn’t apply to the challenges they had faced in the pandemic at the time of their response. One-third of companies did not have a business continuity plan in place before the pandemic at all, but more than half of those companies indicated that they are considering implementing some sort of continuity plan in the future.
We asked businesses to rate themselves concerning their ability to adapt in the face of the pandemic. Regardless of whether or not businesses had continuity plans, overall, the average rating businesses gave themselves for ability to adapt was 4.2/5.
No businesses surveyed said that they were unable to adapt at all in the face of the pandemic, and only 14% say that they adapted with difficulty; 76% of businesses said that their ability to adapt in the face of a pandemic was either good or very good.
Unsurprisingly, businesses that had a continuity plan which was relevant to the situations they faced in the pandemic were most likely to evaluate their own ability to adapt as being “very good.” All businesses that had a continuity plan that they were able to implement said that their ability to adapt was good or very good.
Still, of the businesses that did not have a continuity plan at all, 72% still say that their ability to effectively adapt to the pandemic was either good or very good.
What is the greatest challenge businesses will face over the next six months?
Maintaining a safe environment for employees is the greatest challenge for 35% of businesses, while many others cite various financial concerns as their greatest challenge, such as maintaining PPP loan forgiveness, collecting receipts, making payroll and making accounts payable (collectively, 39%).
Did businesses utilize financial assistance via The CARES Act (including PPP loans)?
76% of businesses applied for relief provided by the CARES Act. Of those businesses that did apply, 84% say that they received relief that was adequate to meet their needs. 13% of businesses voluntarily chose to not apply for assistance, while 11% said that they did not meet qualifying criteria for any assistance at all through the CARES Act.
Interestingly, only 15% of the respondents who indicated that they received a Paycheck Protection Program (PPP) loan also indicated that PPP loan forgiveness would be their greatest challenge in the next six months.
While the PPP is the widest-known aspect of the CARES Act, there are other relief mechanisms included that businesses that don’t qualify for the PPP can utilize. Companies within the 11% that believe they don’t qualify for any assistance should contact their business advisor.
When we asked businesses to describe in their own words what future plans they have for maintaining liquidity in the next six months, the most common answers included placing a greater emphasis on accounts receivable and collections from customers, instituting further budget cuts (especially concerning discretionary spending), implementing additional reductions in staff, drawing on lines of credit and introducing new services and/or products to their customer bases.
All businesses surveyed believe they will eventually return to the level of operations that they saw before the pandemic, though timelines and perspectives vary.
32% of businesses cite that they have either already recovered, are in the same position as they were before, or have exceeded their level of operations from before the pandemic.
The other 68% of businesses that are still looking toward the recovery process are optimistic. 71% of those that haven’t recovered believe they will be fully recovered within the next year, while 10% of those businesses believe they will recover but aren’t sure how long it will take.
56% of businesses believe that they will be better off (or much better off) six months from now than they were at the time of their response submissions. Only 5% of businesses believe that they will be worse off in six months than they are now.
The information presented in the report above is based on a survey that Warren Averett conducted of 75 individuals who voluntarily contributed information on behalf of their organizations. Responses were gathered in June and July of 2020.
Aside from being offered access to the results of this survey, respondents were not incentivized to participate. The survey was promoted through Warren Averett’s website, email subscriptions, social media outlets and individual outreach by the firm’s employees to their respective networks.
Below, we’ve outlined the demographics of those who responded to the survey:
Location information reported by respondents skews toward Warren Averett’s firm footprint and office locations, with 92% of respondents indicating that their company is headquartered in either Alabama, Florida or Georgia.
Most survey respondents indicated that they had roles in senior-level management at their respective organizations, with others indicating that they worked in Finance, HR, Administration or other departments within a company.
Of the companies represented, 64% identified themselves as a C or S Corporation and 21% identified themselves as an LLC.
Responding organizations have varying numbers of employees:
While the novel coronavirus has no doubt brought hardship to businesses in the recent months, and while it’s true that each business has had different challenges, many seem to have adapted well.
We must recognize that a majority of the survey’s respondents are located in the Southeast region of the country, and the information in the responses reinforces the situations we have seen in this region. The information from these survey respondents may not reflect the situations in different parts of the country due to varying industries, job composition and state-imposed regulations. Businesses in different parts of the country faced differing challenges, and we believe that much of the information within represents that of the Southeast.
Paycheck Protection Program
The PPP has no doubt been extremely helpful to businesses. The stimulus package allowed businesses the time to assess their situations in regard to continuity plans and staffing before instituting severe layoffs and budget cuts. This time was not only valuable to the businesses who received the funding, but to the employees who were retained on payrolls.
As of the date of this report, Congress is working on another stimulus package that will reportedly allow certain businesses to apply for another round of Paycheck Protection Program (PPP) funding. However, only businesses that meet a decline in revenue test, to be determined, are expected to be eligible. Congress continues to consider ways to simplify the forgiveness process for certain borrowers, but nothing has been finalized yet.
The Coronavirus has brought about numerous changes in the way businesses manage their employees. Employers are now considering how to manage a remote workforce and how to invest in technology to allow for that capability. For many employers, remote work will be a new way of operating, and it brings challenges of staying connected with employees.
Many employers are offering additional paid leave or are considering revising sick leave policies in light of the pandemic. The demand for mental health benefits and employee assistance programs for employees and their dependents need to be on the discussion board as we move forward. Employers and employees should prepare for benefit costs for 2021 and review ways to cut costs, while also preserving the most important part of being a good employer.
As we continue to progress into uncertain times, even though many companies have already recovered or are quickly moving toward recovery, none of us know for sure what the future will hold. If the trajectory of recovery continues, we expect businesses to show resiliency based on the results of this survey. If it doesn’t, and cases rise and states begin to close again, we would hope that Congress would act with appropriate relief for businesses.
Thanks to all who participated and contributed your business’s insight and experience to this survey. We are extremely grateful to you for your time and participation, which allowed Warren Averett to create this resource.