Rick Thomas is Executive Vice President and Northern Nevada Executive at Nevada State Bank.
In 2020, many small businesses in Nevada saw their sales and revenue shrink due to coronavirus pandemic-related shutdowns, capacity restrictions, supply chain snarls and rapid shifts in consumer behavior.
Though the Silver State is in the midst of bouncing back from the doldrums of 2020, it might come as no surprise the top concern for small businesses is the economy.
That’s according to Nevada State Bank’s eighth annual small business survey, which was conducted by Las Vegas research firm Applied Analysis in January and the results published in late March.
The survey, which canvassed more than 400 small businesses in Nevada, revealed that about half of those surveyed are “very concerned” with the economy’s potential to impact businesses.
Rick Thomas, executive VP/Northern Nevada executive of Nevada State Bank, pointed out the fact that when the survey was conducted (January), the economy was in a much shakier state than it is now.
“It speaks to that, at the time, there was still a lot of uncertainty,” Thomas said in a recent phone interview with the NNBW. “The economy was almost at a pause, and businesses were kind of trying to determine which way things are going to head. The effects of the past year were likely still a large concern and on their mind.”
Back in January, though, COVID restrictions were still tightened and vaccinations were not yet widely available to Nevadans.
What’s more, the country was on the heels of a controversial 2020 presidential election. As such, the survey showed that 63% of the NSB survey’s respondents believe the Nevada economy is headed in the wrong direction, and nearly 53% feel the national economy is too.
Notably, the survey was a statewide sampling and did not have any results specific to Washoe and Carson City counties, Thomas said.
“If you took the same survey now, I would speculate that the survey would have much more optimistic results,” Thomas said. “At the time, Nevada unemployment was still relatively at a high point, retail sales were down, the visitor volumes and gaming revenues were down.”
Even though all those areas have improved since early in the year, an issue that many businesses are still facing is a shortage of workers.
In fact, more than 20% of respondents find hiring and retaining qualified employees as the single most important challenge they face as a business today.
In the same vein, the survey showed recruiting quality employees as a challenge, with about 74% of small business owners saying it was somewhat or very difficult for them to recruit quality job candidates in the Nevada market.
“That is one of the largest concerns and what I hear businesses talking about a lot,” Thomas said. “I would say the majority of our customers that we’re talking to are dealing with a lower employee base than they were pre-pandemic. And I would say the majority of them have openings at this time.”
The survey showed that nearly 1 in 3 small business owners decreased their staff in 2020. This year, 30% say they plan to increase their workforce.
“Population and job growth are still going on here,” Thomas said. “That’s primarily a byproduct of our success. As companies are moving to Northern Nevada, our economy is more diverse, which is great, because that’ll give us more resilience and economic downturns, which is somewhat of a pandemic, but you know we have some catching up to in providing the needed employee base to support the continued growth in our region.”
The Nevada State Bank survey also showed that 94% of respondents that applied for the Payment Protection Program (PPP) loan were successful in obtaining one.
To that end, 90.5% indicated that their banking relationship was somewhat-to-very important to the success of their business. Notably, 88% of respondents reported remaining open and operating as an essential business during the COVID crisis.
Because of the aforementioned challenges of operating as a business during a pandemic, few saw growth in 2020. More than 50% of respondents said their revenue or sales decreased and about 28% said their sales flat last year.
Even though a majority of small businesses feel the business environment in Nevada has gotten worse, many are optimistic about what 2021 will bring. Nearly 37% respondents believe their profitability will increase this year, while only about 18% expect it to decrease. Another 42% of those surveyed project their profitability to stay the same.
Zooming out, Nevada’s small businesses believe it will take an average of three years for the U.S. economy to return to pre-pandemic levels. Silver State respondents, however, feel their business will bounce back to a pre-COVID state in only 1.8 years.
“When the survey was taken, in January, I think that’s a pretty good estimate, when you’re talking about a complete return to all business lines,” Thomas said. “We’re seeing some really strong trends and some lines of business are already back to pre-pandemic levels. We’re seeing strong indicators and performances in construction and gaming, as well as indicators that people want to start traveling and going out to restaurants again.
“Obviously, in a tourism economy, that’s a benefit. And other businesses are starting to get their logistics back on track.”