COVID-19 pummeled the smallest of small businesses, according to a new study that views the pandemic’s impact through the lens of bank deposits.

Intuit QuickBooks commissioned an economist to see how the pandemic has affected the finances of small businesses across the country.

Small business revenues in Connecticut fell 28% because of the pandemic, above the national average of 22%.

The economist, Susan Woodward, looked at the bank deposits of one million businesses, each with typically 10 or fewer employees, from every major sector and industry.

Among her findings are:

  • The pandemic’s biggest impact on small business revenue was in April 2020 when revenues fell by 22% nationwide, equivalent to $4.6 billion for that month alone.
  • Overall small business revenue was down 28% in Connecticut in April 2020.
  • Revenues increased for 61% of industries during the pandemic after a largely sustained recovery since April 2020.
  • The top performers over the past year are home improvement and real estate businesses. The annual revenue of mortgage bankers increased by 30% compared to pre-pandemic levels—an average increase of $147,000 per business.
  • The recreation industry had some of the hardest hit small businesses. For example, annual revenues at bowling alleys were down 33% by the end of March 2021, an average drop of more than $250,000 per business.
  • Small businesses in high density, urban areas—especially in states located on the east and west coasts—experienced a greater financial impact from the pandemic. Areas hit the hardest include New York City, especially Brooklyn, and San Francisco.

Turnaround

The study did found some encouraging news.

“Even some of the worst hit businesses are back to pre-pandemic levels,” the study said.

“For example, by the end of March 2021, the monthly revenues of hair studios were 13% above their pre-pandemic levels.

“This is a huge turnaround from the low point in April 2020 when their monthly revenues were 78% lower than before the pandemic—equivalent to more than $11,000 per business for that month alone.”

The study found that the small businesses that suffered the greatest drop in revenue are oil and gas (down 20%), recreation (down 20%), local transport (19%), movies (15%), hotels and lodging, (12%), education (11%), and museums and attractions (11%).

Strong Sectors

But some businesses and industries were able to increase revenues during the pandemic.

These included financial and insurance (up 14%), agricultural services (up 11%), fishing and hunting (11%), building and garden materials (10%), utilities (10%), forestry (8%), and crop production (8%).

The study also found that sustained recoveries in every industry started after the pandemic’s low point in April 2020.

“Fast forward to the end of March 2021 and all 10 U.S. sectors were back above the monthly revenue benchmarks they set before the pandemic,” the study said.

It noted that by March 2021, monthly revenue in the construction industry was up by 30%, retail by 22%, and manufacturing 20%.

Recovery Help

Despite the revenue gains of many small business sectors, the study said small businesses still need help recovering.

“This is particularly true for recreation, tourism, and entertainment businesses, but also for retailers, bars, and restaurants, among others,” the study noted.

"The goal here is to make small businesses more competitive and less vulnerable to future recessions."

Economist Susan Woodward

It recommends expanding access to COVID-19 relief funds to more small businesses, guaranteeing government support for the smallest of businesses, and making it easier for small businesses to go digital.

“The goal here is to make small businesses more competitive and less vulnerable to future recessions,” Woodward wrote.

“This could be in partnership with the Small Business Development Center network and the SBA’s Women’s Business Center, for example.”