THE IMPACTS OF THE COVID-19 CRISIS ON WOMAN-OWNED BUSINESSES, PART 1
The COVID-19 crisis is affecting everyone in unique ways by presenting different challenges as well as opportunities. This blog is part one of two about the impacts of the pandemic. We wrote two blogs to look at the crisis from different views and by doing so, gain a deeper understanding of the effects of COVID-19 as well as the challenges it presents. Make sure to check out both!
The COVID-19 pandemic has highlighted underlying sexism and bias. It’s no secret that women are being hit harder financially by the crisis than men. There are two main factors: one, more essential workers are women, and two, on average, women-owned businesses have less capital. Below we will dive into some data about the effects of COVID-19 on women, with a focus on woman owned businesses.
IMPACT OF COVID-19
SMALL BUSINESSES AND COVID-19
A recent study showed that over 50% of small businesses, that’s more than 7.5 million small businesses, are facing great risks from the pandemic. Even large businesses, such as Gap and Macy’s, have had to lay off a significant amount of employees. Even as shelter in place restrictions are being slowly lifted in many places, we will see more and more small, and even large, businesses filing for bankruptcy.
CNBC reported that if things continue at the current rate, 34.1% of small businesses will have to close permanently. Only 0.4% of small businesses have seen over a 75% revenue increase, compared to 56.9% of small businesses saying their revenue has decreased by 75%. One of Colibri Digital Marketing’s clients has seen an increase in business. They are a birth center and have been getting more clients because people are not comfortable going to hospitals due to the risk of contracting COVID-19.
On the other end of the spectrum, hospitality, retail, and personal service businesses are being hit hardest. For the most part these services have had to shut down temporarily, and in an increasing amount of cases, permanently. As they struggle to keep afloat, they are turning to alternative ways of keeping business going. Some hair salons are offering over the phone cuts, where they give advice and guide you as best they can. A few hospitality businesses have been able to stay afloat by offering a room for students whose dorms were closed and cannot travel home. As for retail, the best option has been to turn to online shopping, although not many have been able to implement this.
Small businesses rely heavily on every sale and every client to stay afloat and clients not being able to afford their services or not being able to have an open brick and mortar space, means they must rely on their savings, funding they can get through different resources, and people’s generosity.
WOMEN-OWNED SMALL BUSINESSES AND COVID-19
As we have seen, small businesses are suffering devastating effects of the crisis, but woman-owned small businesses are being hurt the most. First of all, women make up 51% of the population and only 33% of business owners. As we have seen in past economic crises, such as the great recession of 2008, woman-owned businesses were hit harder and took longer to recover.
One of the reasons behind women being impacted more harshly is that women-owned businesses tend to receive less capital in the beginning to fund their business, which decreases their ability to have a big enough safety net to keep their business afloat during recessions. On top of that, women-owned businesses make, on average, $384,000 where male-owned businesses tend to make $752,000 in revenue a year. Another factor which decreases safety nets for woman-owned businesses is the pay gap, with women making roughly 82% of what men make. For more information on the pay gap and inequality in the workplace, check out this article.
But even the pay gap doesn’t equally affect women. Compared to White men’s weekly earnings, Black women earn 65.3%, Latina women earn 61.6% and White women earn 83%. Keeping these statistics in mind, it’s easy to see that women of color will be hit the hardest by the pandemic. Black women are starting businesses at the fastest rate compared to other races, in fact, women of color make up 47% of women-owned businesses. But minority-women-owned businesses make much less than non-minority woman-owned businesses. As you can see below, Black women-owned businesses make on average $24,000 in revenue and all women-owned businesses make $142,900, meaning Black women-owned businesses make 16% of what all women-owned businesses make.
Source: American Express
Not only do minority-women-owned businesses have less capital in their businesses, meaning a smaller safety net, but the disparities in the US healthcare system gives women of color less medical attention than white women. As you can see below, black women are 4.3 times more likely to die of COVID-19 than white people.
Source: The Guardian
There is bias in every system we have, from tech to healthcare to schooling, but the bias in our healthcare is causing devastating effects at the time. For women of color who own business, contracting COVID-19 can be the final straw in killing their business. Not only is there greater concern for health and safety, but even a relatively mild case could be fatal because of the lack of medical attention and resources. Plus, for small businesses, one sick employee can be a major set back.
Lastly, woman-owned businesses are mainly businesses that cannot operate during the crisis, meaning they do not qualify as essential businesses. There are roughly 2.8 million woman-owned personal service businesses such as nail salons, pet care businesses, or organizational services. Secondly, there are roughly 1.5 million woman-owned professional, scientific, and technical businesses, such as digital marketers, bookkeepers, and lawyers. Although these businesses have better chances of surviving the crisis than retail, they have been negatively impacted due to clients not being able to pay and little lead generation because clients do not have the resources to invest in these services.
Source: Business Journal
When we take into account all of these factors, it’s easy to see that in many cases women-owned businesses, especially minority-owned, start out a step behind male-owned businesses. Therefore, when crisis hits, women-owned businesses, specifically small businesses, are already standing on more uncertain ground. The pandemic has highlighted the uneven playing field and begs the question: what can we do to create more equity? Right now, a way we can help is by making an effort to support women-owned businesses and small businesses, increasing the chance of keeping them alive.
CHILDCARE AND COVID-19
As you can see in the graphic above, there are lots of woman-owned health care businesses, such as caregivers and childcare services. Lots of women within this category have lost their jobs, and because the companies have lost clients, they may be forced to go out of business permanently. Not only does this impact caregivers own family and income, it places strain on the families they were employed by. Business women with children who previously had help from childcare services, now need to spend more time caring for their children while also balancing saving their business. Imagine having to set your child up on a zoom call with their first grade class then running to get back on your own zoom meeting.
Single parents are facing new challenges due to this as well. Without any sort of help, taking care of children full time and trying to continue working is nearly impossible. When we look at single parent homes by race, 65% of Black or African American children in the US live in single parent homes, 24% of white children, and 41% of Hispanic or Latino children . When considering how minority owned businesses are affected by the pandemic, taking into account the amount of single parent homes is essential. Minority-female-owned businesses are already at a disadvantage, but being a single parent causes new problems that greatly affect business, especially during a pandemic.
FEMALE ESSENTIAL WORKERS AND COVID-19
According to a recent report by the New York Times, 52% of essential workers are women and make up 77% of health care jobs, putting them at a much higher risk of contracting COVID-19. Below is a graph about the amount of women who are essential workers.
Source: New York Times
These numbers once again highlight the uneven playing field we have in the US. There are not enough resources being supplied to support essential workers, especially ones who have families at home to help care for. Female essential workers are for the most part making less than their male counterparts, decreasing their safety nets similar to female business owners.
It’s important in this time to recognize how different people are being impacted and what you can do to help. We are all facing new challenges and in unfamiliar territory. Frighteneing time scna lead to hate and discrimination, as we are seeing right now, so remebering that this is unfamiliar for everyone can help foster empathy and support.
As woman-owned businesses are suffering, people are coming together to provide support. Companies, such as Goldman Sachs, are offering resources to help female business owners make educated business decisions during this time. The Tory Burch Foundation has put together resources to help women business owners apply for loans. We know that a lot of our audience are female entrepreneurs so hopefully you find these helpful!
If you are in need of help, check out this list of resources from WBENC as well as this article from Fast Company. Please reach out to us with any more helpful resources and to strengthen our woman-owned business community.
If you need help or advice on how you can use digital marketing to keep your business afloat, reach out to Colibri Digital Marketing, a B Corp certified digital marketing agency in San Francisco, for a complimentary 30 minute strategy session.