Washtenaw County small businesses more optimistic about post-pandemic prospects, report finds

Desy Papper

A year after the COVID-19 pandemic hit Southeast Michigan, small business owners in Washtenaw County are starting to see a light at the end of the tunnel. A recent COVID-19 business impact report by Ann Arbor-based EntryPoint, a research organization that studies startup economies around the Midwest, found the majority […]

A year after the COVID-19 pandemic hit Southeast Michigan, small business owners in Washtenaw County are starting to see a light at the end of the tunnel.

A recent COVID-19 business impact report by Ann Arbor-based EntryPoint, a research organization that studies startup economies around the Midwest, found the majority of 459 participating small business owners in Washtenaw County surveyed (81 percent) believe they will still be operating come June 30, while 3 percent suspect they will be closed and 16 percent were unsure of their future prospects.

Since the onset of the pandemic, 71 percent of businesses have applied for loans, with 88 percent of those applications being approved. Of those that sought Paycheck Protection Program loans, 92 percent were approved — up from 74 percent in May.

Nearly 58 percent of Washtenaw County PPP loan recipients had not yet applied to have the loans forgiven. Of the 42 percent of PPP loan recipients who did apply for loan forgiveness, 24 percent said they have been granted forgiveness, with 18 percent still awaiting a response.No participants reported having been denied PPP loan forgiveness.

Of the small number of businesses still unsure about their future, some did not seek out any financial assistance.

“If those business owners are still unsure about the prospects of their business, I don’t think they want to take out a loan for payroll that you’re locked into for however many months,” said Emily Heintz, EntryPoint founder and managing director. “They’re already feeling pessimistic, and it may not be entirely related to the pandemic. The pandemic may have just been the nail in the coffin.”

Heintz said the overall tone of the report is positive, with the small business owners surveyed saying they gained a greater appreciation for their staffs during the pandemic.

“The pandemic has been hard,” Heintz said. “Staffs have come together more as a team. Business owners are grateful for staffers. EntryPoint also fits within this population. We’re a team of five. I feel my colleagues and I have come together as a team.”

That positivity is reflected in rising hiring practices, according to the report. Thirty percent of the respondents said they were actively hiring, up from 17 percent in a May report. Heintz said companies across a broad range of industries are hiring, including tech companies specializing in information technology, manufacturing and home services.

Of those participating in the survey, 93 percent have less than 25 employees and 76 percent have fewer than 10 employees.

While the mood may be changing for the better, Washtenaw County businesses still have suffered a great deal over the last year.

Total revenue in 2020 was down 19 percent from 2019. Companies surveyed in the hospitality, hotels, restaurants and service sector earned 42 percent less revenue in 2020 than in 2019, while the entertainment, events and sports sector earned 35 percent less. Revenues for companies in the business and professional services sector decreased by 28 percent from 2019.

Heintz acknowledged a level of uncertainty among business owners early in the pandemic, which weighed heavily on them.

“With the vaccine roll-out, optimism is higher,” she said.

Things could return to “normal” sooner than later, Heintz said, but that normalcy may not include a return to the office. Employers overall feel their staff is enjoying a mix of remote and on-site work. Thirty-six percent of Washtenaw County businesses aren’t able to offer a remote option.

“Remote work is here to stay,” said Heintz, a 2016 Crain’s 40 under 40 honoree. “Over half of the businesses we talked to operate virtually, and a third of those have no plan to return to a physical location. We’ll see a lot of businesses just stay remote. I think we’ll see some issues this fall. Real estate, rent and permanent long-term leases will impact the areas they’re in significantly.”

Heintz said the data shows that Washtenaw County small businesses have found ways to stay afloat during the pandemic, including direct shipping and an increased e-commerce presence.

“It’s important to analyze businesses now and after the pandemic. The landscape continues to shift,” Heintz said. “Policy makers and economic developers need to look at their small business communities and get feedback from small business owners.

“… small business owners have very successfully navigated their way through a very tough time in history. A lot of small business owners feel positive about the future.”

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