Cape Cod Businesses Navigate a Challenging Summer Season

Oct 1, 2020

Second economic impact survey data reveals decline in customers and cash, businesses employ creative strategies to continue operating

FOR IMMEDIATE RELEASE (October 1, 2020) -- Results from a second economic impact survey issued to local business owners by the Cape Cod Commission and the Cape Cod Chamber of Commerce suggest continued impacts to our business community due to COVID-19.

More than 400 responses were received, representing businesses in all 15 Cape Cod towns. Respondents reflect the top industries in the region including accommodations, retail, and restaurants, construction, real estate, health care, and recreation.

Many businesses and organizations reported Q1 and Q2 losses of 50% or more compared to 2019. The length of time business owners believed they could stay operational on current cash flow and reserves was longer on average compared to the first survey (issued in May). Several businesses noted falling behind on rent and other bills, while many faced increased costs due to increased sanitation or shifting operations online.

Cape Cod faced unprecedented levels of unemployment due to COVID-19. Businesses and organizations closed down, reduced hours, and shifted operations online where possible, but some employees remained furloughed or laid off through August. Many more remained working on reduced schedules. Some businesses struggled with employees being unable or unwilling to return, citing concerns about health and safety, limited wages, and childcare.

By the time the second survey was issued in August, most Cape Cod businesses had reopened. However, many businesses had to suspend the face-to-face interaction they had with customers prior to the pandemic, disproportionately affecting the region’s substantial tourism and hospitality industries. The number of customers and sales declined for many, and businesses faced increased operational costs related to sanitation and social distancing. Many businesses took advantage of the Payroll Protection Program (PPP) in an effort to maintain their workforce, while others relied on savings and loans to survive a diminished summer.

The most requested resource among respondents was support for communications, marketing, and social media, as businesses need to reach their customers online more effectively. For the respondents who had applied for PPP to support their business/organization, the vast majority were approved for the full amount, and expected to be fully refunded.

“This data will help local communities continue to recover from the impacts of COVID-19,” said Cape Cod Commission Executive Director Kristy Senatori. “The information can be leveraged by businesses, towns, and other organizations as we look to bring additional resources to our region.”

“Our businesses worked hard over the busy summer months to follow safe opening practices which they maintained and will continue to operate safely during our Second Summer campaign,” said Cape Cod Chamber of Commerce CEO Wendy Northcross. “We are encouraged that so many businesses are remaining open and looking towards a full recovery.”

Visualizations and a report on the survey results are available online at the Cape Cod COVID-19 Data Dashboard: www.datacapecod.com/second-business-impact-survey

Summary:

Open for Business

7.2% of responders are completely closed; 54.1% are open in a limited way, and 38.8% are completely open

Of the 29 respondents who were closed, 4.7% are shut down for good, and another 34.4% were unsure; 60.9% will reopen

Business Continuity

About 35.6% of respondents believe they can only operate for 6 months or less with their current cash flow and reserves; 42.5% can operate 7 months or longer; 22.0% said they’re not sure. (First survey: 45% estimated that with current cash flow and reserves, they could only operate for 6 months or less)
62.7% of respondents think it will take more than six months for their business to return to its normal level of operation; 19.3% don’t believe that will return.
11.6% of respondents say there has been little or no effect on our normal level of operation

Challenges to Business

The key challenges facing businesses during reopening have been:

Reduction in number of customers (68.2%)
Enforcing social distancing and mask regulations (63.7%)
Increased cleaning/sanitation (62.9%), especially the increased costs (noted by 77.3% of all respondents)

Other increased costs respondents have incurred include the cost of moving operations online (29.3%), increased wages/hazard pay (28.4%), and cost of expanding operations outside (19.9%).

Operations impacts (58.7%) (Hours of operations reduced, supply chain/distribution disrupted, increased operating costs)
Decline in customers/clients (68.5%)
Temporary closures (48.4%)

Cancellations of projects, events, and/or contracts (45.8%)
42.6% of respondents have had trouble getting people to return to work. Out of the 186 respondents who answered why, the majority of employees cited health and safety concerns (61.8%), the expanded unemployment during COVID exceeded their income (48.9%), and childcare concerns (25.3%). If they responded “other”, many respondents noted the immigration laws preventing J1 and H2B Visa holders from entering the US.

Revenues

52.3% of respondents say their revenues are down more than 50%;
21.1% of respondents are down more than 75%. (First survey: When comparing April 2020 to April 2019, 66% saw revenue losses over 50% including 54% that reported losses over 75%)

Adaptation and Assistance Needed

The resources that respondents are using to managing COVID impacts include participating in a program to mitigation layoffs, such as PPP (63.1%), personal savings (44.7%), and new or refinanced loans (31.9%). Several noted EIDL loans under “other.”

For those that applied for PPP, 73.5% had it approved for the full amount, 18.5% for a partial amount; only 3.8% were denied. Most (78%) expected to be fully refunded for the PPP loan.

The types of assistance still needed by businesses are: business continuity/disaster planning (28.7%), communications/marketing/social media help (30.2%), and collaborating with other organizations/developing partnerships (26%)

First survey: Communications/marketing/social media was highest, followed by operational and peer support/networking then business continuity/disaster planning

22.8% already leveraged assistance in communications/marketing/social media, while 17.1% already used peer support/networking and 16% already leveraged operations and strategic planning support
The type of support that’s least needed was permitting/zoning support (68.8%), followed by development/fundraising support (65.6%)

Who Responded?

73.6% of respondents are year-round

Nearly every industry was covered, with the majority (similar to the first survey) being in retail, restaurants, and accommodations
83.9% of respondents relied on customers coming into a physical location, which the state-level survey from MassINC has shown to be the hardest hit group of businesses
Provincetown had the highest number of respondents (86), followed by Barnstable (38)
91.3% were for-profit
The majority of businesses made between $100-$500,000 in revenues last year, but all revenue brackets were represented (under $10k to over $10m)