BigTime Software has carried out a second survey of its clients into the impact of the COVID-19 pandemic in the US market. The first looked at the impact on working practices and revenue. As the lockdown continues into the second month the survey looked at how companies are looking to survive and how many are applying for the CARES Act Payroll Protection Program.
The dilemma facing small businesses is that they want to retain their staff in the long term but face financial losses from doing so. Brian Saunders, founder, and CEO of BigTime Software commented: “Small businesses remain optimistic, increasingly relying on the resilience of the US economy. But, with no clear timeline for ending the lockdown, this is beginning to look like a ‘bet the farm’ strategy.
“In our survey, we saw that even without the extra support, small business owners are not reducing their staff as quickly as their larger counterparts. Those small business owners seem to be willing to take on the lion’s share of the risk, likely because it isn’t just business for them: it’s personal. They treat their staff like family.”
The survey was completed on April 9 and included more than 200 responses from companies with less than 50 employees and between 50-200 employees across the US.
Business as usual for many? Not quite
The survey respondents came from several industry sectors including accounting, architecture, engineering, IT Services and management consulting firms. Unfortunately, BigTime did not look at the difference between these but focused instead by size of organisation. What was striking was the sentiment around the impact on revenue was broadly unchanged from the previous month with 41% seeing an impact in the current quarter compared to 38% a month ago. However, 76% believe that the impact will last less than a year or less than a quarter, compared to 45% a month ago.
With regards to charging rates the larger the organisation the more likely that rates are changing. Still only a third (33.3%) of firms with 51-200 employees are reducing rates to win business. Only 3.1% of the smallest firms are reducing rates. Overall, 87% of respondents are not yet reducing their rates.
Some companies are reducing headcount. A third of the largest firms are cutting staffing by less than 10%, but 16.6% are cutting staff between 10-25%. Some of the smaller firms are cutting teams more than 25%!
Impact of the CARES Act
In the US, the CARES act aims to support the US economy during the pandemic. It includes loans to support the paychecks of companies with less than 500 employees. The survey found that the larger the firm the more likely it was to apply for the grant. 100% of firms between 51-200 employees are applying, only 62.5% of the smallest (1-5 employees) are. Interesting BigTime reveals that Marketing and Architecture firms are the most likely to apply for the grant. Marketing budgets have been one of the first areas cut by many businesses as they seek to understand how to change messaging and approaches during the lockdown.
No respondents are looking to increase headcount. However 13% are still hiring, presumably to replace lost staff. The larger the company, the more likely that recruitment is continuing, though that could just be a reflection of natural turnover. Those not hiring will re-evaluate after the pandemic is over. 40% say they will re-evaluate the situation when the pandemic is over. Half of the smallest firms (1-5 employees) have no plans to add staff in 2020. However, BigTime did not seek to understand if that was a change from earlier in the year.
Enterprise Times: What does this mean
The BigTime surveys are providing some interesting insights into changing views during the pandemic. The PSA vendor will be concerned that several firms are reducing headcount. This is likely to impact future SaaS revenues. However, it seems that where possible firms are trying to retain staff. There are advantages to doing so, not least the cost of recruiting is high. Staff morale is also a consideration. Those losing their jobs will find it tough to gain employment and those retained may easily suffer from survivor guilt which can have a detrimental impact on the firm’s culture in the future.
If BigTime issue another survey in a further months time it will be interesting to see how sentiment changes yet again. Some countries are emerging from lockdown slowly. Many in the US will hope it does so too, but emerging from lockdown is not likely to see a quick return to normality.