Survey Findings Indicate How Business Owners and CEOs Are Addressing COVID-19 Recession

Nearly 60 percent of business owners and leaders who responded to a June Minnesota Business Pulse survey said they expected no changes in employment levels by June 30, while 21 percent said they were hiring and 21 percent were reducing headcount. About half of these leaders say they expect overall business conditions to improve during the third quarter ending Sept. 30, while 38 percent anticipate they’ll worsen.

These responses came from 49 Minnesota business owners and CEOs representing small to mid-size businesses in 17 industries. Platinum Group’s Dale Kurschner conducted the poll, which focused primarily on how businesses were adapting thus far to the COVID-19 pandemic.

More than half of the Minnesota Business Pulse respondents anticipated revenue decreases for the quarter ending June 30, with 28 percent preparing for declines of 11 percent or more. Only 13 percent expected revenues to stay steady, and 24 percent anticipated gains.

While most planned to remain in business, 14 percent indicated they may need to seek bankruptcy protection if economic conditions don’t improve by September.

Nearly a third of respondents expected accounts receivable to drop; 39 percent planned to reduce marketing/advertising expenditures; 30 percent planned to reduce capital expenditures and 28 percent planned to reduce R&D through June. Holding fairly steady were new orders and employee productivity.

Also, in the second quarter ending June 30, 46 percent of respondents said covering their financial obligations had become harder, and nearly a third reported tougher conditions with supply chain management and inventory management.

When asked to share what has worked well thus far in addressing the COVID-19 recession, the most common response related to working remotely/working from home. Answers that stood out include the following:

  • “First, we are operating (almost flawlessly) as a virtual company; second, we leaned into our strengths; third we reiterated our commitment to our employees, customers, and partners (no layoffs/furloughs), and we've made several additions to staff; fourth, we remain on offense - looking for growth.”
  • “We focused on our existing clients, knowing that new business would be shut down for a while. We have been able to expand inside of those clients and our product enables WFH.”
  • “Outdoor walking meetings with clients” and ““meeting outside, having clients stay in their cars for drive-by signings. Lots of video conferences.”

When asked what their greatest challenge was in the quarter just ended, the most common answer (21 percent of responses) had to do with attracting and retaining talent. Other answers most often pertained to growing sales and cash flow, understanding what the next “new normal” will be and figuring out how to adjust operations accordingly.

Surveys Elsewhere

The Minneapolis/St. Paul Business Journal surveyed Twin Cities area businesses in early June and found 83 percent of those responding said COVID-19 had a negative impact on their business.

Of the 232 business leaders responding to that survey, 72 percent said employees in their companies were working from home all the time. Regarding moving forward in ways that ensure their employees and customers are as safe as possible while COVID-19 is still present, 60 percent would like to see the availability of widespread testing, 65 percent will be using social distancing and 55 percent will be using personal protective equipment. About two-thirds of respondents also said they would be providing training to their employees on Covid-19 guidelines from the Centers for Disease Control.

Elsewhere, the Minnesota Chamber of Commerce indicates nearly two-thirds of the roughly 750 businesses responding to its queries since March reported medium to large negative impacts on year-to-date sales and revenue due to COVID-19, and more than 45 percent said they made modest to significant cuts in their workforce.  (Information on how many companies participated in this poll was not available in time for the deadline on this article.)

The chamber also found one in three manufacturers had shifted production to make critical goods to fight COVID-19, while 25 percent of businesses across all industries said they changed the types of products and services they provide. Some 70 percent say they’re planning new products or services in 2021. (For more, see the Chamber’s update on Minnesota’s economy.)

For readers who would like to know more about the state of Minnesota’s economy, the chamber has partnered with IHS Market to provide a short- and long-range forecast on Minnesota’s economy, and findings will be presented on July 9.