Many small businesses in Massachusetts are still making less revenue than before the pandemic, a recent survey shows. And businesses owned by people of color are more likely to report difficult business conditions.
The MassINC Polling Group conducted the survey for the Coalition for an Equitable Economy and the Mass Growth Capital Corporation. The group contacted 3,243 Massachusetts businesses with 500 or fewer employees from June through August. Just over half of businesses – 53% – reported receiving less revenue than they did before the pandemic. About 26% reported making more money than before the pandemic.
Steve Koczela, president of MassINC, said one reason many businesses have yet to fully recover from the start of the pandemic is simply less foot traffic for places like restaurants, bars and dry cleaners.
Another, he said, is a lack of access to affordable capital. Many business owners have not been able to make the necessary investments over the past two years, especially black entrepreneurs. Koczela said they are more likely than white entrepreneurs to report being turned down by banks when applying for business loans.
“These same entrepreneurs of color are the most likely to say, ‘If I had the funding I was looking for, I would do things like expand, I would hire, I would buy a new piece of equipment,'” he said. Koczela. “They are more likely to require capital to do these types of expansion projects than white-owned businesses.”
The survey also found that people of color are less likely to sell their business or step down from senior management positions. Koczela said this is a sign that small business ownership is likely to become more racially diverse.
“That’s the way it’s going,” he said. “But to really get there in the strongest possible way, there are barriers,” and the biggest one may be access to capital.
The survey found that 15% of businesses reported receiving some technical assistance or training in the past year. More black, Latino, women and LGBTQ business owners said they sought help with tasks such as applying for grants or learning to use new technologies. However, nearly half of all small business owners said they lacked information about this type of assistance.
One available resource is the Massachusetts Small Business Development Center Network, which offers free assistance to small business owners who want to expand or improve their businesses. The program is primarily funded by the federal and state governments.
Cliff Robbins, a senior business adviser for the network, said more small business owners have sought help since the pandemic began. His team was working around the clock helping businesses apply for federal grants at the height of COVID. Now the group is focused on helping business owners navigate a rapidly changing economy – one that relies more on technology and has fierce competition for talent. But, Robbins said, the biggest challenge facing small business owners right now is inflation.
“They’re caught between a rock and a hard place,” Robbins said. “They have to raise their prices. At the same time, they don’t want to lose customers.”
According to the MassINC survey, 74% of small business owners said their biggest concern is rising costs due to inflation.
The Federal Reserve this week raised interest rates again as part of a strategy to combat rising prices. But high interest rates will also make it more expensive for businesses to get money.
Update: This post has been updated with a new chart from MassINC Polling Group showing that 60% of all survey respondents, 85% of Black small business owners and 88% of Latino small business owners reported concerns about access to capital.