COVID-19 and the Entrepreneurial Spirit

By Generational Equity


Between April 15th and 20th, Permanent Equity, a private equity firm surveyed owners and operators of small businesses to help the firm, as they describe it:

“Put some numbers on the impact of the COVID-19 pandemic. 336 owners/operators from 43 different states opened up about how the virus and the ensuing economic shutdown have changed their businesses. While the data reveals serious challenges, we were repeatedly encouraged by the optimism of small business owners. There are struggles ahead, but in the long run the same entrepreneurial spirit that drove each of you to launch your business in the first place will lead us to the other side.

You can download the entire survey here:

I found quite a bit of the survey results not only compelling but quite remarkable. I will share some of the results of the survey with you to hopefully give you confidence that once the economy begins to re-open, business owners are ready to get to work (and some already are).

For example, of the 336 surveyed, 32% at that time had either flat or even expanding revenue despite the ongoing crisis:

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Given the significant disruptions in the economy, the fact that 16% had flat revenue growth and 16% had actually expanded is truly remarkable. This tells me that entrepreneurs are adapting to new conditions and are creatively responding to this new world with strategies that are innovative and inventive.

Another remarkable outcome of the survey was that nearly 20% believed that revenue for 2020 would end up above or flat when compared to pre-COVID-19 expectations. Again, this is truly amazing to me and speaks volumes about how entrepreneurs are adapting and overcoming current challenges:

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Lots of commentators in the business media are preaching massive declines in 2020 for most companies across the board. However, based on the entrepreneurs surveyed by Permanent Equity, significant declines in revenue of over 50% or more are really not expected to be dominant across all revenue bands:

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One of the most interesting changes we have seen the business community adapt to is the need for virtual and remote offices. As you can see below, even among smaller firms, the strategy of having associates work off-site is something that post COVID-19 may become a permanent strategy:

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What is most striking to me is that the largest categories of businesses that will implement virtual workforces post-pandemic are under $10 million in revenue! Again, this reminds us that the small business community is often quicker to adapt and adopt than larger, less flexible firms.

The next data set really amazed me. Nearly 12% of all firms surveyed have actually continued with their hiring plans since the economic impact of COVID-19 and 55% have kept their workforce intact:

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This is a wonderful testament to just how much entrepreneurs value their associates. Most recognize that no matter what industry they are in, the success of nearly every venture boils down to one thing: Talented teams who work together to achieve great goals!

A wise man once told me: If you want to treat your customers right, start by treating your employees right. This is clearly shown above and in the efforts business owners are putting into retaining their teams, many even making significant personal financial sacrifices to do so. Again, we applaud business owners for being dedicated to their associates even in the face of dire circumstances.

This Too Shall Pass

This also tells us that entrepreneurs are taking the longer-term view of this recession than in past economic declines, realizing the recovery will be quick and strong and will be built by retained and valued associates.

This longer-term view is also seen in planned spending. Historically (at least with my history of budget cuts) one of the first areas sliced in a recession is marketing. However, as we can see below, entrepreneurs are taking a different tact; 38% are planning no changes and 12% are actually expanding marketing spending! This again tells me that business owners are realizing that there are still consumers/clients that are buying and that marketing is vital to stay in front of them:

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Of course the real controversy right now is how long it will take our economy to once again reach pre-2020 levels. The following chart speaks volumes as to the mindset of most business owners. Nearly 40% expect their revenue to reach pre-2020 levels in six months or less and 12% think it will take only one month once the economy starts to re-open:

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Finally, the following data set tells us why our economy is so blessed to have entrepreneurs in our midst. A huge majority expect that this crisis will actually make their businesses stronger than before:

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How can this be you might ask? Again, it tells us much about the innovative spirit, the need to implement new ideas, and the drive and hard work that business owners are willing to pour into their companies. It also tells us that great leaders inspire. 

During a time when it is easy to despair and give up, entrepreneurs are coming up with bold new ideas, new strategies and to quote the U.S. Marine Corps’ Motto: “Improvise, Adapt, And Overcome”.

As an aside, to be honest, this survey was inspirational to me. I have been working with business owners since 1986 and have long been impressed with the moxie, brilliance, and determination it takes to start and successfully run a business.

This is ever more true today during our current crisis. I salute every business owner who is staying for the good fight, coming up with innovations, and is essentially preparing for the post-pandemic economic recovery that is sure to come.

The really good news is that once this crisis is over, professional business buyers plan to become very active. What will they be looking for? Businesses run by entrepreneurs who innovated, thought outside the box, retained their talent, and fought to preserve their dreams despite the bad news generated by the crisis.

These will be truly “buyer ready” businesses because buyers will know that if a company can survive the first six months of 2020, they can survive anything!

So I truly hope that the survey I shared with you today was as inspiring to you as it was to me. I know that right now is a very difficult time for most of us. And I don’t want to downplay the pain and suffering so many of us are going through.

I just think that there is hope at the end of this tunnel just like there was during the Civil War, the Great Depression, WWII, Vietnam, and the Great Recession.

I am just so thankful we have a huge base of entrepreneurs to lead us out of this mess!

To learn more about how we can help you begin working today to create a buyer ready business, please use the following links:

And special thanks to the team with Permanent Equity for doing this survey. They did a great job and if you would like to download it, you can here:

Carl Doerksen is the Director of Corporate Development at Generational Equity.

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