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Updated: April 24, 2024

The state of small Businesses in 2020

Published By:

Elliott Brown

More from our experts

This report presents our annual research into how small businesses manage finance and HR, whether they’re able to build strong teams, and what they think about the future. We surveyed more than 1,000 small business owners and more than 1,000 employees of small businesses to get a clear picture of how they run.


Read on for detailed benchmarks and analysis about everything from what software small businesses use, to whether they work with accountants, to how they’ve been affected by COVID-19.

Key findings and methodology

This year, COVID-19 was front and center in our research.


Only 12% of small businesses say things are “normal” for them right now, but business owners are generally optimistic about when business will pick up. As more states reopen after lifting COVID-19 shelter-in-place orders, 62% of small business owners now believe their businesses will return to normal this year, and 43% expect to see an increase in annual revenue in spite of the disruptions and distractions that have affected them.


While business owners’ overall outlook seems positive, it’s decidedly less rosy than it was in last year’s report when 69% of small businesses told us they expected an increase in revenue. We also saw business owners taking steps to cut employment costs: The average company laid off or furloughed 27% of its employees.


Not surprisingly, employees of small businesses are concerned about what’s to come. Nearly half of employees say they’re worried that they’ll be furloughed or laid off in the next six months. And 54% of employees report working at a company where workers have lost jobs or wages as a result of COVID-19.


Despite these setbacks, both business owners and employees generally agree that small businesses are doing a good job of weathering the storm. Seventy percent of employers believe they’ve been able to take good care of their employees during the outbreak, and 78% of employees agree. Less than a quarter of small businesses have had to cut back on employee benefits like health insurance, and many businesses have successfully implemented work from home policies. Prior to the outbreak, 44% of small businesses allowed some or all employees to work from home. Almost 65% say they’ll offer a work from home policy after the outbreak is over.

Survey methodology

Between June 2 and June 9, 2020, OnPay surveyed a panel of 1058 managers and owners of US small businesses with between one and 500 employees. On the same dates, OnPay also surveyed a panel of 1015 employees at US small businesses. The panels used for this study were provided by Cint, and we conducted the survey online using SurveyMonkey. All respondents were selected randomly and responses were anonymous. If you have questions about our research or would like access to our raw data, please email

The impact of COVID-19 on small businesses

At the end of May 2020, the Bureau of Labor Statistics reported that over 15 million Americans had lost jobs since February. Our research shows that smaller businesses seem to be more impacted than larger ones:

  • The median small business laid off or furloughed 27% of its workforce
  • Seven percent of small businesses report laying off or furloughing their entire workforce
  • Only 29% of small businesses report retaining their entire workforce


When we asked small business employees about how they and their coworkers have have been affected, 54% reported that they or others at their company are earning less income due to a layoff, furlough, or lost wages:


Of the employees we surveyed, the median employee reports earning 83% of their previous income. Additionally, 16% of small business employees report being laid off as a result of COVID-19, while 23% of employees who remain on the job say their employer has cut back on benefits.


Outlook and morale

Employers have had to make some tough decisions about their workforce, so it’s not surprising they give themselves mixed reviews on how well they’ve taken care of their teams. Only 36% say they’ve taken care of employees “very well.” Their employees seem to understand the predicament, however, and they actually tend to rate employers better than employers rate themselves:


Overall, employees are 36% more likely to think their employer cared for them very well. And 50% of employees who have been laid off or furloughed would still recommend their employer to a prospective employee.


While morale seems pretty good, the outlook of small businesses is definitely down year over year:


Overall, 43% of small businesses expect an increase in revenue in 2020, compared to 69% in our 2019 study. This year 32% of small businesses expect a decrease in revenue, versus just 4% last year.


Bigger businesses appear to be more optimistic in general. For example, they are much more likely to expect a significant increase in revenue:


In addition to expecting more revenue, larger small businesses are also more likely to think they’re taking care of employees well, and they are less likely to reduce employee pay or benefits. When it comes to participating in governmental relief programs, larger businesses also seemed to be at an advantage (see more below).


Regardless of employee count, our survey showed general optimism about being able to get back to business soon.


Adding to the mood of slight optimism, 62% of small businesses expect things will be back to normal by the end of the year. Additionally, 12% say things are already back to normal, while just 4% say things will never be back to normal.

The PPP and other governmental relief

In March, the federal government passed the CARES Act and the Families First Coronovirus Relief Act. The most notable program was the $660 billion in forgivable small business loans via the Paycheck Protection Program (PPP), but several other avenues for relief were available. More than half of small businesses have participated in these programs so far:


Different sized businesses participated in the PPP at similar rates, but larger businesses were 25-75% more likely to participate in secondary programs like Social Security tax deferrals and the employee retention tax credits under the CARES Act.


For those who received loans, it’s not clear how much of a benefit the PPP program has had. Business owners who participated in the PPP program and those who didn’t had very similar outlooks on expected 2020 revenue and when things would return to normal. Businesses that received loans also weren’t much more likely to retain employees.


Looking deep into the data, PPP recipients only stood apart from the pack in that they were:

  • 14% more likely to continue hiring new employees through the COVID-19 outbreak
  • 15% more likely to think their accountant’s advice was “important”
  • 19% more likely to use payroll software, and
  • 23% more likely to say they’ve taken care of employees well

Though managing payroll can be one of the trickier aspects of running a business, our small business payroll calculator is a free tool that does the math and makes this process a little easier. In a few clicks, you’ll be able to calculate your employee’s gross pay, net pay, and federal and state withholdings (for any state) in a matter of seconds.

Working from home becomes mainstream

As shelter-in-place orders went into effect, 75% of small businesses were forced to change the way they work. Some limited operations and some closed, but over 35% of all small businesses adapted by making remote work an important part of their operations:


In the latest US Census data (from 2018), 5.3% of Americans worked from home. While we saw 35% of businesses making remote work central to their operations, many more businesses experimented with work from home policies:


Before the COVID-19 outbreak, 44% of small business owners allowed some form of working from home, but now 65% say they’ll make it a part of their business even when sheltering-in-place is no longer necessary. An additional 11% have permitted remote working temporarily, but plan to revert to working on site once the outbreak is over.


The 2020 revenue and “back to normal” outlooks for businesses which allow working from home are slightly higher than businesses who have kept their employees on site. These companies probably fared better simply because their business model or industry are more suited to remote work. None of the small business owners who were forced to close their businesses (temporarily or permanently) allowed their employees to work from home.


Employees who worked from home were 20% more likely to say their employer cares for them very well, and they were also more likely to recommend their employer to prospective employees. Whether an employee had children had little to no impact on whether working from home was easier or harder for a given employee.


How small businesses work with accountants

Small business owners who use accountants and bookkeepers have gotten a lot of help from them through the COVID-19 outbreak. For some context, last year’s survey looked closely at the relationship between small business owners and their accountant, and we learned the following:

  • Only 30% of small businesses use an external accountant
  • Accountants are small business owners’ most trusted advisors for a wide range of business advice. They’re more trusted than lawyers, bankers, friends or family.
  • Overall, 61% of small business owners are satisfied with the range of services their accountant provides.
  • Small business owners who are satisfied with their accountant’s range of services are about a third more likely to view them as a trusted advisor.


This year, it looks like accountants’ trusted advisor role is expanding. In particular, they have really stepped up to help out with COVID-19 related relief programs:


Given the complicated documentation needed for both PPP loans and tracking the various new tax credits under the CARES act, it’s not surprising that accountants have generally played an important role. We also saw that small businesses without an accountant are less likely to:

  • Expect an increase in revenue
  • Expect business to return to normal soon
  • Receive governmental relief


Companies with one to five employees have the toughest outlook to begin with, but they’re also a third less likely to have an accountant.


For small business owners who do have an accountant, we also see a greater tendency toward delegating some responsibilities — which may explain why they’ve been able to roll with the punches more effectively. For example, small business owners who think an accountant’s help is important are about twice as likely to have an employee dedicated to HR tasks. They’re also more likely to be confident that their employment practices are compliant with governmental rules and regulations.


As small businesses try to cut costs, we also saw 15% report that they have cut back on their use of accounting or bookkeeping services. However, when it comes to prioritizing cost-cutting, they were about twice as likely to cut labor costs as they were to ratchet back on the accounting fees they pay.

Coming soon

Over the next few weeks, we’ll be rolling out additional survey data and benchmarks that cover:

  • Who small business owners are
  • The outlook of minority, woman, and veteran-owned businesses
  • Habits of successful businesses
  • What makes a company a good place to work
  • HR benchmarks and best practices
  • Which benefits small businesses offer (and what employees expect)
  • Small business software usage
  • How small businesses work with accountants


If you’d like to be notified about future updates, please let us know:

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Elliott Brown is the former Director of Marketing for OnPay. Before joining the team full time, he was a marketing consultant for fintech startups, and he ran content marketing programs at SurveyMonkey and