Most Businesses Believe They Can Reopen Safely, Amid Great Challenges

Trenton, NJ – Seventy percent of business owners say they are able to operate safely under CDC social distancing guidelines according to a new NJBIA Business Recovery Survey inquiring how a soft opening might affect their business model.

However, a large majority of New Jersey business owners say they’ll need more than half of their usual client or customer base to break even in any given month.

Additionally, many respondents said they would never generate a profit, or need at least a year to generate a profit, if businesses are reopened at 50% capacity.

“The results of this survey put a finer detail on the true challenges that lie ahead, even with a soft opening at 50% capacity, as we work toward a recovery and reinvention framework for New Jersey’s economy,” said NJBIA President and CEO Michele Siekerka.

“Some of our additional data focusing on revenues and financial assistance also reveal great challenges. However, now knowing the true needs and concerns of our businesses in even a partial re-opening allows us to work toward solutions and an effective plan of action for the reopening of our economy.”

NJBIA has been working alongside a coalition of 80 business and nonprofit associations, advocating for policies on the state and federal level to provide employers relief and funding during the COVID- 19 health crisis and to aid in their recovery.

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REOPENING STATEMENTS

Respondents were asked what percentage of patrons, clients and customers are required, on average, for their business to break even in a given month. They responded:

• 0-24%: 9%
• 25-49%: 7%
• 50-74%: 29%
• 75-99%: 36%
• 100%: 18%

Assuming a 50% partial reopening of business facilities is allowed, respondents were asked how long they anticipate it would take for their business to generate revenues comparable to pre-COVID- 19 profits. They responded:

• 3 months or less: 9%
• 4-6 months: 17%
• 7-9 months: 11%
• 10 months to a year: 14%
• More than a year: 23%
• More than two years: 6%
• I could never generate a profit at 50% capacity: 21%

There was a mixed range of responses from employers when asked what percentage of their total, in-person workforce is needed for their business to operate productively:

• 0-24%: 19%
• 25-49%: 16%
• 50-74%: 23%
• 75-99%: 15%
• 100%: 27%

Employers were also asked to list their top three struggles for their businesses, resulting in the following leading responses:

• Meeting payroll costs: 59%
• Paying the rent: 44%
• Ensuring worker safety: 22%
• Repaying existing loans on time: 22%
• Handling supply chain disruptions: 21%
• Making quarterly tax payment: 20%
• Paying payroll taxes: 19%

Other business struggles yielding 12% or less included: Paying quarterly or annual CBT/GIT payment; complying with labor mandates; cost of maintaining equipment; finding enough employees to fill workplace needs; concerns about future lawsuits.

Members were asked if their business is able to operate under CDC social distancing guidelines. A total of 70% said yes, while 19% said they were not sure. Another 10% said they would not be able to operate under CDC guidelines.

“It’s a positive to see the capability and willingness of employers to operate with appropriate social distancing,” Siekerka said. “What remains to be seen is what entry limitations will be put on businesses, and whether customers will have the same initial willingness to patronize out of health concerns.”

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REVENUES AND REALITIES

A whopping 66% reported a decrease in revenue during the current health crisis, while another 27% reported no revenue – leaving only 5% of respondents reporting normal revenue.

At the same time, about 32% of respondents have laid off at least one worker as a result of COVID- 19.

“It would appear there’s a correlation between the number of companies reporting no revenue to the number of companies having to lay off at least one employee,” said Nicole Sandelier, NJBIA’s Director of Economic Policy Research. “Nearly 8% of respondents said they have let go of 10 workers or more, which relates to some of the high unemployment numbers we have seen on a state and national level.”

When asked how they were accommodating for lost revenue, 53% said they either reduced workers’ hours, or furloughed or laid off employees. Eleven percent said they tapped into business reserves or personal savings, while another 11% sought additional funding through loans, credit lines, government aid or increased donations.

STAYING OPERATIONAL

Thirty-six percent of respondents were forced to close as a result of an executive order. Of those, 70% envisioned their closure as being temporary, while 29% weren’t sure whether they would reopen or not.

Of those that were directed to close their premises, 70% said they were still operating remotely, but experiencing financial losses. Another 18% said they voluntarily closed, while 10% they were continuing operations as normal.

Overall, 54% of respondents listed their business as struggling to perform its essential duties, while another 25% said it was unable to perform its essential duties at all.

Employers were also asked how, or if, their physical workspace might be affected as a result of COVID-19. Nearly 29% said their workspace will not be impacted, while 23% anticipated increased costs for sanitizing and 20% expected added costs for PPE. Only 7% said they would need structural changes to implement social distancing.

GRANTS AND LOANS

NJBIA’s Business Recovery Survey was taken between April 23 and April 28. While there was an expectation that some of the data would change based on respondents receiving grants and loans after they took the survey, the overall results showed that most businesses were, by and large, playing the waiting game.

Some 74% of employers surveyed applied for the federal Paycheck Protection Program (PPP). Of those, 65% said they had not yet received their funding at the time they took the survey, while 30% said they had received funding. Five percent said they were not approved.

Employers who applied for PPP were asked how they intended to use those funds, and they were not limited to one choice. A little more than 98% of the respondents said they would put it toward payroll costs, while others said they would apply some funds to utilities (68%), rent (66%) and mortgage interest (15%).

Of the businesses who applied for a Small Business Emergency grant or loan from NJEDA, 78% had not received their funds as of the past few days.

The New Jersey Business Coalition has been strongly advocating for a portion of CARES Act funding to be used for an appropriation for the NJEDA in order to provide further relief to small business.

METHODOLOGY

The NJBIA Recovery Survey was conducted by the New Jersey Business & Industry Association from April 23 to April 28, 2020. At the time of the published press release on Tuesday, April 28, 2020, a total of 1,359 respondents, comprised of NJBIA members and members from other partnering business associations who are participating in the New Jersey Business Coalition, took part in the online survey. In total 1,420 respondents participated in the survey. Because of the additional responses received after the press release was published, the results below may differ slightly from those reported in the original press release. Totals may not equal 100% due to rounding.

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QUESTIONS AND RESULTS

The Impact of Coronavirus

1. Do you own or manage a business or non-profit entity?

Answered: 1,398        Skipped: 22

Yes	88.77%
No	11.23%

2. Are you a primary decision maker for operational decisions about the organization, including finances and staffing?

Answered: 1,399        Skipped: 21

Yes	93.35%
No	6.65%

3. Approximately how many employees did your organization have prior to COVID-19

Answered: 1,397        Skipped 23

1	16.03%
2-4	22.41%
5-9	20.26%
10-19	14.67%
20-49	14.60%
50-99	4.72%
100-249	4.37%
250-499	1.50%
500+	1.43%

4. A) What industry is your business?

Answered: 1,399        Skipped: 21

Mining and Logging	0.00%
Construction	9.36%
Manufacturing	9.72%
Trade, Transportation, Utilities	4.15%
Information	1.00%
Financial Activities	2.64%
Professional & Business Services	19.66%
Education & Health Services	9.36%
Leisure & Hospitality	7.72%
Other (please specify)*	36.38%

B) What industry is your business?*

*Responses to “Other” were reviewed and updated to provide more clarity to industrial breakdown.

Construction	11%
Education, Health Services & Social Assistance	12%
Financial Activities	3%
Information	2%
Leisure & Hospitality	10%
Manufacturing	13%
Mining & Logging	0%
Trade, Transportation, Utilities	6%
Professional, Business & Other Services	35%
Wholesale & Retail	5%
Other	8%
Other	2%
Arts, Entertainment, Recreation	3%
Real Estate	1%
Technology	1%
Warehousing & Distribution	1%

5. Was your business ordered to close as a result of an Executive Order?

Answered: 1,264           Skipped: 156

Yes	36.16%
No	63.84%

6. If your business was ordered to close as a result of an executive order, do you see your closure being:

Answered 667        Skipped: 753

Temporary	70.31%
Permanent	1.20%
Unsure	28.49%

7. If your business was not ordered to close as a result of an executive order, select the answer that best applies to you:

Answered: 1,033        Skipped: 387

We’re still operating and performing better than normal	1.36%
We’re still operating like normal	9.39%
We’re still operating, but experiencing financial losses	70.28%
We’re permanently closed as a result of COVID 19	1.45%
We’re temporarily closed as a result of COVID-19*	17.52%

*Participants who selected the option for temporary closer were then asked when they plan to reopen. The overwhelming majority responded with some iteration of “when they are allowed”.

8. My business is:

Answered: 1,246        Skipped: 174

Struggling to perform its essential duties	54.49%
Performing its essential duties without challenge	20.71%
Unable to perform its essential duties	24.80%

9. Financially my business is experiencing:

Answered: 1,246        Skipped: 174

Normal revenue	5.28%
Surge in revenue	0.87%
Decrease in revenue	66.56%
No revenue	27.39%

10. What percentage of your operations have been able to be done remotely?

Answered: 1,263        Skipped: 157

0-24%	61.05%
25-49%	8.55%
50-74%	10.53%
75-99%	14.09%
100%	5.78%

11. How many employees have quit their jobs as a result of COVID-19?

Answered: 1,255        Skipped: 165

0	83.43%
1-9	14.66%
10-19	0.96%
20-50	0.72%
50+	0.24%

12. How many employees have you laid off as a result of COVID-19?

Answered: 1,239        Skipped: 181

0	68.36%
1-9	23.73%
10-19	3.79%
20-50	2.50%
50+	1.61%

13. How many employees have you furloughed as a result of COVID-19?

Answered: 1,232        Skipped: 188

0	66.64%
1-9	23.78%
10-19	4.30%
20-50	3.25%
50+	2.03%

14. If you are struggling to access government aid, such as PPP, and EDA grant/loan or unemployment insurance, what is hindering your ability to do so?

Answered: 1,181        Skipped: 239

Waiting for response	55.97%
Ineligible	9.40%
Administrative difficulties in completing application	7.37%
Eligible, but rejected	3.30%
I am not struggling to access government aid	18.54%
I do not want government aid	5.42%

15. A) To adjust for lost revenue, my business has to:

Answered: 1,235        Skipped: 185

Reduce workers’ hours	32.79%
Layoff employees	24.29%
Furlough employees	27.04%
Cut employees. benefits	6.96%
Sell capital	3.64%
Take out a loan	19.03%
Tap into personal savings	23.48%
Not do anything	13.60%
Other (please specify)*	25.18%

B) To adjust for lost revenue, my business has to:*

*Responses to “Other” were reviewed and updated to provide more clarity.

Reduce workers’ hours	20%
Layoff employees	16%
Furlough employees	17%
Cut employees’ benefits	4%
Sell capital	2%
Seek additional funding:Take out a loan, tap credit line, government aid, seek increased donations	11%
Tap into business reserves or personal savings	11%
Not do anything	11%
Other	8.5%
Other	2.5%
Delay Bill Payments (Including vendor payments)	1.3%
Reduce Expenses & Overhead	1.6%
Reduce Pay (Including reduction in salary for Owner/ Executives)	3.0%

16. Please select the top three larges struggles for your business:

Answered: 1,254        Skipped: 166

Meeting payroll costs	58.77%
Paying the rent	43.46%
Repaying existing loans on time	22.65%
Ensuring worker safety	22.17%
Handling supply chain distribution with contractors and vendors shut down/reduced	21.13%
Paying my quarterly property tax payment	19.30%
Paying my payroll taxes	18.74%
Paying my quarterly and/or annual tax (CBT or GIT) payment	11.72%
Complying with labor mandates	10.37%
Cost of maintaining equipment	10.13%
Finding enough employees to fill my workforce needs	7.18%
My business is not struggling	6.62%
Lawsuits or concern for future lawsuits related	4.47%
Other (please specify)	19.14%

The Paycheck Protection Program

17. Did your business apply for the SBA’s Paycheck Protection Program (PPP)?

Answered: 1,292        Skipped: 128

Yes	74.07%
No	25.93%

18. Did your business receive PPP funding?

Answered: 882        Skipped: 538

No, we were not approved	4.76%
Yes	30.39%
Not Yet	64.85%

19. How does your business intend to use the PPP funds? (Select all that apply)

Answered: 868        Skipped: 552

Payroll costs	98.16%
Mortgage interest	14.86%
Rent	65.32%
Utilities	67.86%

20. To have your loan forgiven, 75% of your funds must be used for payroll expenses. Do you intend to seek forgiveness?

Answered: 869        Skipped: 551

Yes	97.24%
No	2.76%

EDA Grants and Loans

21. Did your business apply for an EDA grant or loan?

Answered: 1,228       Skipped: 192

Yes	29.40%
Yes, but was not approved	5.70%
No	64.90%

22. If your business applied for an EDA grant or loan, which did you apply for? (Select all that apply)

Answered: 401        Skipped: 1,019

Small Business Emergency Assistance Grant Program	80.05%
Small Business Emergency Assistance Loan Program	46.38%

23. Did you receive the funds yet?

Answered: 381        Skipped: 1,039

Yes	21.52%
No	78.48%

The Recovery from Coronavirus

24. If required, is your business able to operate under CDC social distancing guidelines?

Answered: 1,105        Skipped: 315

Yes	70.77%
No	9.95%
Not Sure	19.28%

25. If a 50% partial reopening of business facilities is allowed, what percentage of your total workforce is needed in-person for your business to operate productively?

Answered: 1,055        Skipped: 365

0-24%	19.24%
25-49%	15.93%
50-74%	22.84%
75-99%	14.98%
100%	27.01%

26. If a partial reopening of business facilities is allowed, what percentage of business by way of patrons, clients, customers etc. does your operation require on average to break even on any given month?

Answered: 1,044        Skipped: 376

0-24%	9.67%
25-49%	7.18%
50-74%	29.50%
75-99%	35.63%
100%	18.01%

27. If a 50% partial reopening of business facilities is allowed, how long do you anticipate it taking for your business to generate revenues comparable to pre-COVID-19 profits?

Answered: 1,059        Skipped: 361

3 months or less	8.31%
4-6 months	17.75%
7-9 months	10.58%
10 months to a year	14.35%
More than a year	22.29%
More than two years	5.85%
I could never generate a profit at 50% capacity	20.87%

28. Before the COVID-19 health crisis, what percentage of your workforce worked remotely at any given time?

Answered: 1,098 Skipped: 322

0-24%	87.70%
25-49%	3.73%
50-74%	2.19%
75-99%	1.64%
100%	4.74%

29. Was your business able to find new efficiencies and cost-savings opportunities as a result of an increased reliance upon a remote workforce?

Answered: 1,099        Skipped: 321

Yes	13.10%
No	53.05%
We did not have more people work remotely	24.48%
Not Sure	9.37%

30. If you answered yes to the previous question, will you continue to utilize a remote workforce more than you previously had when New Jersey is back open for business?

Answered: 412        Skipped: 1,008

Yes	25.73%
No	44.17%
Note Sure	30.10%

31. How will your physical workspace be affected as a result of COVID-19? (Check all that apply)

Answered: 1,076        Skipped: 344

We will need structural changes in implement social distancing	6.69%
We will need a larger footprint	2.97%
We will need a smaller footprint	1.21%
We will continue or expand remote working	7.25%
We anticipate increased costs for sanitizing	23.33%
We anticipate increased costs for PPE	20.26%
Our physical workspace will not impacted	28.81%
Other (please specify)	9.48%

32. Do you anticipate needing any kind of regulatory relief in order to reopen your business?

Answered: 1,095        Skipped 325

Yes	9.50%
No	27.12%
Not Sure	34.34%
My business did not close	29.04%

33. What regulatory hurdles or relief could impede your ability to reopen?

Answered: 992 Skipped: 428

Permits	7.76%
Licenses	4.74%
Government Contract(s) relief	3.13%
None	19.46%
Not Sure	28.23%
My business did not close	39.72%
Other (please specify)	5.85%

34. What impact will your supply chain have on the ability for your business to operate post COVID-19 (Check all that apply)

Answered: 1,063        Skipped: 357

Delay in time to receive needed products/inventory	44.59%
Availability of products/inventory	39.23%
Increased cost of products/inventory	34.71%
No impact from our supply chain	31.42%
Other (please specify)	5.55%