Cuyahoga County Business Survey Results: An examination of issues including technology and the impact of COVID-19

Executive summary

To better understand the challenges and technology issues facing businesses during the pandemic, Cuyahoga County, the City of Cleveland, and a host of economic development organizations (Economic Community Development Institute, Greater Cleveland Partnership, Cleveland Neighborhood Progress, Urban League of Greater Cleveland, JumpStart, and the Hispanic Business Center) commissioned the Center for Community Solutions to design and analyze the results of a small business survey. More than 600 businesses responded to an online survey meant to help economic development entities better understand challenges and technology issues facing businesses in Cuyahoga County. Respondents tended to be from small businesses, particularly microenterprises with very few employees. They represent a variety of industries, but most are service-providing businesses. The results of this survey include businesses spread throughout Cuyahoga County.Questions focused on technology use and needs, business support, and the impact of COVID-19. In addition to multiple-choice questions, several open-ended questions generated more than 2,000 individual comments.

Technology

Survey results show that businesses in Cuyahoga County are heavily reliant on technology and use it in a variety of ways. Most Cuyahoga County businesses report engaging in online business transactions with consumers. About half are able to accept online payments from consumers, while nearly half are using at least one money transfer app or tool. More than two-thirds of all businesses are using a computer, either a laptop or a desktop, to operate. Nearly all businesses are using high-speed internet.

More than 70 percent of businesses indicated that cost prevents them from using technology to expand their business at least some of the time.

However, more than 70 percent of businesses indicated that cost prevents them from using technology to expand their business at least some of the time. Thirty percent of all businesses indicated that the amount they pay for internet is not affordable. As would be expected, these businesses tended to pay more per month. Internet speed and connectivity were by far the most common technology challenges businesses identified, followed by a lack of skills or training and the cost of technology.According to survey results, technology is very important for the business growth of a greater share of minority-owned businesses and those in majority-Black ZIP codes than for the overall sample. However, minority-owned businesses and those in majority-Black ZIP codes were more likely to report that cost prevents them from using technology to expand their businesses, and they were more likely to report that their business internet service is unaffordable. Minority owned businesses and those located in majority-Black ZIP codes were more likely to be relying on a cell phone as the primary device to operate their business during COVID-19 than the overall sample. Similarly, businesses in majority-Black ZIP codes were about twice as likely to rely on cell phone service or hot spots for internet connectivity to operate their businesses than other businesses.

Business support

COVID-19 has been hard on businesses in Cuyahoga County. Forty percent reported that they temporarily closed or suspended operations, and nearly one-quarter said they delayed the launch of a business or put an idea on hold. When asked to rank the challenges they have experienced, Cuyahoga County businesses said temporarily closing or suspending operations was by far the biggest challenge, followed by shifting from in-person services.

Thirty-seven percent of businesses who completed the survey are struggling.

Overall, 37 percent of businesses who completed the survey are struggling, either because they expect to close within one year or the business cannot survive if conditions persist for more than a year, or both. This fits with other indications of the economic impact of the COVID-19 pandemic, such as persistently high unemployment.The two types of assistance that would be most helpful to struggling businesses in the short term appear to be financial support and help connecting with customers, especially via online methods such as social media. For all businesses in the City of Cleveland, raising capital was the second most common short-term need. According to survey responses, fewer businesses in City of Cleveland ZIP codes have a line of credit or term loan than in other Cuyahoga County communities. Cleveland business were about as likely as those in the suburbs to have applied for a Cuyahoga County Stabilization Fund grant, but they were more successful in obtaining grants than businesses in the suburbs.Personal cash or savings is the most common type of financial capital for Cuyahoga County businesses. More than 100 businesses said they experienced problems when accessing capital.

More than 100 businesses said they experienced problems when accessing capital.

Many businesses in Cuyahoga County are very reliant on Personal Protective Equipment (PPE), yet there do not seem to be many problems related to PPE. Most Cuyahoga County businesses also report that their business could survive even if they were required to quarantine for two weeks. These results could indicate that businesses are adapting as well as can be expected to current circumstances yet are more worried about their long-term prospects.

Implications

Clearly, many businesses in Cuyahoga County face an uncertain future. The results of this survey could be used to target assistance to help speed recovery.

• Access to affordable, high-quality internet services for businesses warrants greater attention. Many businesses identified specific one-time investments, such as replacing aging equipment or obtaining a new technology tool, that could help them grow their business.
• Businesses indicated a strong desire to improve employees’ skills or add employees to help with social media and online marketing. These needs should be considered as local and state government considers additional pandemic recovery supports for small businesses.
• Flexible capital with flexible underwriting is critical and should remain a top priority for recovery efforts to ensure business can deploy assistance where it's most needed.

While the data in this survey is limited, there is some indication of disparities experienced by minority-owned or disadvantaged firms. Assistance should be targeted to these businesses to support their recovery and growth.

INTRODUCTION

To better understand the challenges and technology issues facing businesses during the pandemic, Cuyahoga County, the City of Cleveland, and a host of economic development organizations (Economic Community Development Institute, Greater Cleveland Partnership, Cleveland Neighborhood Progress, Urban League of Greater Cleveland, JumpStart and the Hispanic Business Center) commissioned The Center for Community Solutions to design and analyze the results of a small business survey. Responses were collected online via the Survey Monkey tool between September 14 and October 26, 2020. The economic development entities involved in this work led the effort to distribute the survey to businesses. To incentivize participation, several $50 Amazon gift cards were offered as a raffle prize for individuals who completed the survey.

The full questionnaire can also be found in the Appendix.

The survey garnered 614 valid survey responses. Respondents needed to have a business that was for-profit, located in Cuyahoga County, and in operation for at least one year (opened before September 1, 2019). This survey received enough responses that we can say with some degree of confidence that the sample results apply to the entire population of small businesses in Cuyahoga County. However, the nature of the distribution channels means results may display some bias toward businesses connected with economic and neighborhood development entities and/or those who are more tech-savvy, simply because all responses were collected online. Although paper versions were made available, no paper surveys were returned.Survey questions covered several subjects, including business use of technology, business support, the impact of COVID-19, and financial and capital needs. The survey included multiple choice questions, open-ended questions, and opportunities for respondents to provide comments. Selected verbatim responses are included throughout the report, and all responses to certain questions are included in the Appendix. The full questionnaire can also be found in the Appendix.

Almost 70 percent of respondents had 10 employees or fewer.

This report includes results for each section of the survey, as well as additional analyses of research questions identified by survey sponsors and other community groups.

Respondent characteristics

While businesses of any size were able to take the survey, sponsors were particularly interested in gathering information from small businesses. Almost 70 percent of respondents had 10 employees or fewer. Close to half had fewer than five employees, and 118 had just a single employee. Close to half, or 48 percent, reported estimated gross revenue below $250,000. The charts below provide information about the characteristics of businesses responding to the survey, including ownership type and years of operation. The COVID-19 pandemic—and the public health orders meant to slow virus transmission—has upended nearly all aspects of life since March 2020. As expected, nearly all businesses had experienced at least some disruption because of COVID-19. Most concerning are the 39 percent of businesses in Cuyahoga County that expect the return to business to be difficult. One respondent indicated that their business had permanently closed.

As shown in the map below, responses were gathered from every ZIP code in Cuyahoga County, but were concentrated in the City of Cleveland, Lakewood, and the eastern suburbs.

As shown in the map below, responses were gathered from every ZIP code in Cuyahoga County, but were concentrated in the City of Cleveland, Lakewood, and the eastern suburbs.

Most of the businesses who replied to the survey are part of service industries. Professional services, including consulting, accounting and marketing, were most common, followed by bars and restaurants, and personal care businesses such as barber shops and nail salons. Around one in every five respondents represented a company classified as “other service,” which includes a variety of businesses, like child care, travel agencies, real estate companies, education services, and martial arts and dance studios, to name a few.

While nearly all businesses were banked, only one-quarter of businesses said they provide health insurance to employees. Two-thirds do not provide sick leave to employees. The fact that so many respondents represent businesses that are very small means these percentages probably do not reflect the entire population of businesses in Cuyahoga County.

Forty percent of respondents said they represented woman-owned businesses.

Respondents were asked whether their business falls into certain categories. The survey did not provide definitions of the various classifications, and all were self-identified. Therefore, businesses listed as minority-owned in survey results may not fit other definitions or standards, such as Minority Business Enterprise. A much smaller number of respondents’ businesses are Disadvantaged Business Entities or EDGE Certified than those who said they were minority owned. As shown below, 40 percent of respondents said they represented woman-owned businesses, and 29 percent indicated that they were minority-owned. A much smaller share, less than 5 percent, represented other categories, and more than one-third of respondents (36 percent) said their business does not fall into any of the provided categories. These self- identified classifications were used for comparison during analysis.

Separate from business ownership classification, most individual respondents said that they are white, 14 percent identified themselves as Black or African American, and 5 percent said they were Hispanic or Latinx. However, the question about the respondent’s race and ethnicity was near the end of the survey, and approximately 30 percent of respondents left this question blank. Nearly all the respondents were U.S. citizens, with 90 percent born in the U.S. and another 9 percent being naturalized citizens.

Overall, respondents to the survey tended to be from small business, with particular emphasis on microenterprises with very few employees. They represent a variety of industries, but most are service-providing businesses. The results of this survey include businesses spread throughout Cuyahoga County.

OVERALL SURVEY RESULTS

Businesses and Technology

Technology is critical to the success and growth of many small businesses. According to Deloitte, “digitally advanced” small businesses earned two times as much revenue per employee and were almost three times as likely to be creating jobs as businesses that have low levels of digital engagement.The COVID-19 pandemic and the public health orders meant to slow virus transmission forced many businesses to rapidly adapt their operations. Technology become central to remaining connected while maintaining social distancing protocols.

Sixty percent of Cuyahoga County businesses said technology was “very important” to the growth of their business.

In Cuyahoga County, only a handful of businesses, or less than 4 percent, said that technology was not important. Those businesses who said technology was not important indicated that they find customers through word of mouth or referrals, that their customers are generally uncomfortable with technology, and that their core product was artisanal or handmade, which does not require technology.On the other hand, 60 percent of Cuyahoga County businesses said technology was “very important” to the growth of their business. These companies run the gamut in terms of size and industry. Descriptions of why technology was important also varied. Some pointed to the need to use technology to find and/or connect with customers. Others indicated their business is technology-based, while many pointed to the fact that “this is the way the world is moving” and they needed to keep up to remain competitive.Several respondents mentioned specific technology improvements that could enable their business to grow, such as a system for online appointments, a better Point of Sale system to track inventory, or more use of video conferencing for business meetings.

Use of Technology

Over 70 percent of businesses indicated that they have a website, but most update their website rarely or every few months. The most common “other” responses included updating on an ongoing basis or as needed.

Even many businesses that do not have a website reported engaging in online transactions with consumers. More than one-quarter were able to accept online payments from customers. Several explained that they use social media to engage with customers, and many rely on digital payment tools such as Cash App, Square, or PayPal. Businesses without a website were more likely to be in the personal care industry or to provide other types of services generally delivered in person.

Businesses without a website were more likely to be in the personal care industry or to provide other types of services generally delivered in person.

Most Cuyahoga County businesses report engaging in online business transactions with consumers, such as scheduling appointments, buying products, placing orders, and engaging in e-commerce. As shown below, about half are able to accept online payments from consumers, while nearly half are using at least one money transfer app or tool, such as Venmo, Cash App, Square, PayPal and Zelle.

More than two-thirds of all businesses are using a computer, either a laptop or a desktop, to operate. Nearly all businesses are using high-speed internet. Spectrum and AT&T were the two most common internet service providers mentioned. They were indicated by more than three-quarters of all respondents. Cox, WOW, and various other cellular service providers were also commonly mentioned.

Around half of businesses reported using a Point of Sale System. The most commonly mentioned were Clover, Square, QuickBooks, and PayPal. Several respondents said they were using specialized or proprietary systems, while others said they relied on a basic cash register or credit card machine. Of those using a POS, online transactions were the most common POS function, followed by managing financials and managing inventory. Less than one-quarter of these businesses said they were using their POS for human resources or payroll functions. Several respondents indicated that they can add payroll to their existing POS but they have not done so.

Most respondents use social media, their website, and email, or a combination of all three to support, attract, and contact customers. Verbatim answers are included in the appendix and common words are shown below.

Most respondents use social media, their website, and email, or a combination of all three to support, attract, and contact customers.

Most respondents indicated that they use social media, their website, and email, or a combination of all three to support, attract, and contact customers. Verbatim answers are included in the appendix and common words are shown below.

Cost of Technology

While businesses indicated that they are using various types of technology and most believe it is important to their business growth, many reported that cost was a factor. When asked, “Does cost prevent you from using technology to expand your business?” over one-third answered yes, and another one-third said sometimes. Businesses facing technology cost barriers were more likely to have less than $250,000 in gross revenue, be women-owned, be minority-owned, be a personal care business (barber shop, nail salon, etc.), be a sole proprietorship or LLC, or a respondent who was Black or African-American.

Similar to overall cost of technology, businesses who indicated that internet service is not affordable were more likely to have revenue less than $250,000 per year, be woman-owned, minority-owned, a personal care business or neighborhood health care provider, a sole proprietor or LLC, be running their business from their home, or a respondent who is Black or African-American. Overall, more than half of businesses said that they consider the amount they pay for internet to be affordable, while 30 percent said it was not affordable, and 18 percent were not sure. Spectrum customers were the most likely to report that their internet service is not affordable. As would be expected, businesses who say the internet is not affordable tended to be paying more per month. The median internet cost for those who said internet was affordable was $85, compared to $120 for those who said internet was not affordable.

Cost, especially to upgrade aging technology, was identified by several businesses as their biggest technology headache. However, internet speed and connectivity were by far the most common technology headaches, according to survey respondents. Dropped connections, buffering, slow speeds, and provider reliability were all mentioned as problems. Others listed the need to keep up with change, the process of learning new technologies, and lack of savvy or skills on their part or that of their employees as their biggest headache. Digital advertising, social media, and digital security were also frequently listed.

On a separate survey item (shown in the chart below) businesses were most likely to rate their use of digital advertising and/or social media, including Facebook, Twitter, Instagram, etc., as fair or poor.

Although quality of internet connection was a common headache, internet connectivity and access, including internet service quality and reliability and the ability to use email were identified as excellent or good by more than 80 percent of respondents but poor or fair by 16 percent. A similar share indicated poor or fair technology infrastructure, such as computer and networking hardware, software and apps, internet and communications networking. Since the survey was completed entirely online, results may overstate the technology savvy of business owners, with one-third rating their own digital or computer literacy as “excellent.”As described in greater detail in the “Business Support” section below, marketing and social media assistance was identified as both a short- and longer-term need for businesses in Cuyahoga County.

Business Support

Nearly 400 businesses answered additional questions about the impact of COVID-19 and other aspects of their operations. These questions were described as required for businesses that received Cuyahoga County Stabilization Funds and voluntary for other respondents. Over half of the Cuyahoga County businesses who answered additional questions about business needs said that assistance with marketing, including social media, would be helpful in the short term, and 46 percent identified website or social media management or content development as a need. The top non-technology need was raising capital. Legal services is the only type of business assistance where more respondents indicated they could use help in the longer term rather than in the short term.

More than 130 respondents listed another type of business support that might be helpful. The most common was financial assistance, including grants and loans. Other frequent types were marketing, technology, hiring, mentorship, infrastructure, and lifting COVID-19 restrictions. A full listing of the business support identified by respondents is included in the Appendix.

The most common was financial assistance, including grants and loans.

Given how many respondents expressed a need for financial assistance, it is not a surprise that the most common type of financial capital respondents currently have is personal cash or savings, identified by two-thirds of businesses. More than half reported receiving a Paycheck Protection Program (PPP) or other kind of recoverable grant or non-bank loan, and Economic Injury Disaster Loans (EIDL) were the most common response in the “other” category. Just over one-quarter of businesses said they have term loans for things like equipment, buildings, or business growth. Investment capital, such as venture capital investment, mezzanine debt/equity, and angel investments were rare.

In response to a separate question (as shown below), more businesses indicated that they received financial support from the Paycheck Protection Program. While most business who said they applied to Small Business Administration or Cuyahoga County programs were successful in obtaining support, more businesses said they sought help from their city or municipality, a nonprofit or foundation, and community development corporation than those who successfully obtained those grants or loans. In open-ended questions, respondents described a variety of financial needs, especially to deal with the challenges presented by COVID-19.

Several other financial assistance programs and grants were identified as places businesses in Cuyahoga County have received support during COVID-19. These include Ohio Minority Micro-Enterprise Grants, chamber of commerce grants, Hebrew Free Loan Association programs, and loans from specific financial intuitions.

Many businesses were hesitant to take out loans during these uncertain times.

More than 100 businesses said they experienced problems when accessing capital for their business. Many pointed to challenges with PPP and the need for capital for weathering economic challenges presented by the pandemic. Several identified their own credit score as a barrier, and others indicated their business was too small to obtain capital needed to expand. Many businesses were hesitant to take out loans during these uncertain times.

Even with these challenges in obtaining financial support, nearly all respondents indicated that they have a business banking account with a traditional banking institution. Only eight responding businesses were unbanked.

COVID-19 Impacts

The COVID-19 pandemic—and the public health orders meant to slow virus transmission—has upended nearly all aspects of life since March 2020. As expected, nearly all businesses had experienced at least some disruption because of COVID-19. Most concerning are the 39 percent of businesses in Cuyahoga County that expect the return to business to be difficult. One respondent indicated that their business had permanently closed.

COVID-19 has been hard on businesses in Cuyahoga County. Forty percent reported that they temporarily closed or suspended operations, and nearly one-quarter delayed the launch of a business or put an idea on hold. Many made staff changes, including laying off staff temporarily (31 percent) or permanently (11 percent), while a smaller number hired more staff (8 percent). One-third of businesses shifted from in-person services to virtual, pickup, or drive-through services. Changing hours, limiting capacity, and working from home were examples of other adjustments businesses have made. When asked to rank the challenges they have experienced, Cuyahoga County businesses said temporarily closing or suspending operations was by far the biggest challenge they faced, followed by shifting from in-person services.

As shown in the chart above, nearly three-quarters reported that their sales or revenue had decreased, or they expected it to. More than half of businesses had experienced a decrease in number of customers and/or demand for their products and services. Many had cut employee hours or shifts, and nearly half had reduced their staffing or number of employees or expected a reduction. Some businesses did see increased demand and increased business development, and they expanded the number and types of services or products offered. But those who saw such increases were fewer than those who experienced decreases in these areas.

Many businesses in Cuyahoga County are very reliant on Personal Protective Equipment (PPE), yet there do not seem to be many problems related to PPE. Most businesses said they are able to obtain the PPE their company needs, while over 60 percent reported that the amount they spend on PPE is affordable. Companies that said they are not at all reliant on PPE tended to be home-based, have moved to be entirely virtual, or are very small.Most Cuyahoga County businesses also report that their business could survive even if they were required to quarantine for two weeks. When asked “Why or Why Not?” those respondents who said their businesses could survive pointed to their team, such as a partner, CFO, or other employees. They indicated that they had plans in place and many said that their customers would wait for them to return. Those who said their businesses could not survive tended to be sole proprietors and “it was just them” running the business.

These results could indicate that businesses are adapting as well as can be expected to current circumstances yet are more worried about their long-term prospects. As described in greater detail the following section, many businesses in Cuyahoga County are struggling during COVID-19, including some who received Cuyahoga County Stabilization funds.

Many businesses in Cuyahoga County are struggling during COVID-19, including some who received Cuyahoga County Stabilization funds.

Nearly all businesses in Cuyahoga County have experienced some disruption because of COVID-19. Up to this point, many businesses have been able to access government assistance to remain open, via Small Business Administration loan programs and the Cuyahoga County Stabilization Fund. However, significant uncertainty in the future viability of businesses remains. The longer the pandemic lasts, the more businesses we are likely to see close permanently.

RACIAL DISPARITIES

The entities that commissioned the survey sought to illuminate racial disparities in the accessibility and use of technology for different groups of businesses. There were two sub-classifications used to examine information using a racial equity lens.1. There were 142 respondents whose businesses were located in a majority-Black zip code.2. There were 176 respondents who identified themselves as a “minority-owned” business.3. There were 84 respondents who indicated that they are Black or African American. However, all but five of these are captured within the group of minority-owned businesses.There is some overlap within these groups. About 40 percent of the minority-owned businesses who responded to the survey and provided their zip code are located in majority Black zip codes.

About 40 percent of the minority-owned businesses who responded to the survey and provided their zip code are located in majority Black zip codes.

As described in greater detail below, we used two different definitions to examine racial disparities, one based on geography and one based on self-identified business ownership. While there is some overlap between these groups, they are not the same. For example, minority-owned businesses were more likely than those in majority-Black zip codes to report using technology in various ways. Also, while digital advertising and/or social media were the aspects of technology most often identified as fair or poor, fewer minority-owned businesses reported these problems than businesses in majority-Black zip codes. Therefore, while the differences between sub-groups can help illuminate possible community issues, findings relating to racial disparities in survey responses should be interpreted with caution.

Technology Issues in Majority-Black Zip Codes

Within Cuyahoga County, there are 17 zip codes where the majority of residents are Black or African American. These majority-Black zip codes are located on the east side of Cleveland and in the eastern suburbs, including Bedford, East Cleveland, Euclid, South Euclid, and parts of Cleveland Heights. Within the City of Cleveland, 44106 is the only east-side zip code which is not majority-Black. This is the University Circle neighborhood.

Close to one-quarter of respondents’ businesses were located in majority-Black zip codes. Of these 142 businesses, 80 are located within City of Cleveland zip codes. The Cleveland metropolitan area is highly segregated by race, so we are able to use geographic location as a proxy for race when examining data on community conditions.Across the board, most businesses said that technology is very important for the growth of their business. Minority-owned businesses and those located in majority-Black zip codes were slightly more likely than the full sample to say that technology is very important.

Forty percent of businesses in majority-Black ZIP codes (compared to only 28 percent of businesses in other zip codes) said that cost prevents them from using technology to expand their business. Businesses in majority-Black zip codes were also more likely to say that their business internet service is not affordable. Yet the average amount paid per month for small business internet service in these areas was $119 per month, which is less than the average of $170 per month paid by businesses in other zip codes. This suggests that affordability is not entirely determined by price.

Similar to minority-owned businesses, businesses located in majority-Black zip codes were more likely to be relying on a cell phone as the primary device during COVID-19. They were also slightly more likely to be using a desktop computer, and slightly less likely to be using a laptop computer or tablet. Cable internet was by far the most common type of internet connectivity used to operate businesses across all groups. However, given the reliance on cell phones, it is not a surprise that businesses in majority-Black zip codes were about twice as likely to rely on cell phone service or hot spots for internet connectivity. Twelve percent of businesses in majority-Black zip codes used these types of services, compared to 5 percent of businesses in majority-white zip codes or where zip code was unknown.

Businesses located in majority-Black zip codes were more likely to rate various aspects of technology use as fair or poor. The largest gaps were in the areas of digital advertising and/or social media and the ability of employees to use technology. This suggests that additional training could be of greater benefit for businesses located in majority-Black areas of the community.

Most businesses in majority-Black zip codes said that they could benefit from assistance with marketing, including social media, within the next six months. Compared to the full sample, a greater share of businesses in majority-Black zip codes said that support to raise capital (48 percent) and using or upgrading technology (45 percent) would be very helpful in the short term. They were also slightly more likely to identify transportation assistance for employees and basic computer training as needs.

Technology Issues Among Minority-Owned Businesses

Self-identified minority-owned businesses were more likely than the full sample to be small, with 69 percent having less than $250,000 in gross revenue annually. About half of these businesses were also woman-owned and 11 percent were immigrant-owned. Over half of minority-owned businesses were from three industries: Professional Services, Restaurant/Bar, and Personal Care.

As indicated above, cost seemed to be a larger factor for minority-owned businesses than businesses in Cuyahoga County overall. Forty-three percent of minority owned businesses answered yes that cost prevents them from using technology to expand their business, compared to 36 percent of all businesses.

Minority-owned businesses were also more likely to report that their internet was unaffordable. Thirty-eight percent of minority owned businesses said the amount they pay for internet is not affordable, compared to 30 percent of all respondents.

Minority-owned businesses were more likely to be using a cell phone to run their businesses.

Similar to businesses in majority-Black zip codes, minority-owned businesses were more likely to be using a cell phone to run their businesses, with 28 percent saying this was their primary device. Nearly two thirds (64 percent) of minority-owned businesses used a money transfer app or tool such as Venmo or PayPal, compared to less than half (48 percent) of all businesses. Minority-owned businesses are tech savvy in other ways, and it was more common for minority-owned businesses to engage in online business transactions with consumers and accept online payments.

Perhaps in part because of their tech savvy, minority-owned businesses were less likely to say that help with marketing and social media would be helpful in the short term. This is in contrast to businesses in majority-Black zip codes. On the other hand, more minority-owned businesses, nearly one-quarter (24 percent) rated their internet connectivity and access as poor or fair, compared to 21 percent in majority-Black zip codes. The differences between all businesses and Minority-owned businesses were generally smaller than those between businesses in majority-Black Zip codes and those located in other areas.

According to these survey results, technology is even more important to minority-owned businesses and those located in Black communities in Cuyahoga County. These businesses were more likely than the overall sample to be using a variety of technology tools to promote their business and connect with customers.However, cost was a greater deterrent, despite the fact that businesses in majority-Black zip codes were paying less for internet service on average than those in other parts of the county. Minority-owned businesses are not unique in the technology challenges they face, but more of them report experiencing issues.

Minority-owned businesses are not unique in the technology challenges they face, but more of them report experiencing issues.

Although laptop and desktop computers are the most common devices among the whole sample, more minority-owned businesses report using cell phones as their primary device. Therefore, the technology infrastructure on which they rely is somewhat different.

Business Assistance

According to survey results, minority-owned businesses and those located in majority-Black zip codes were more likely to be relying on personal cash or savings and slightly less likely to have other types of business capital.

Overall, most of the businesses who replied to the survey and applied for the Cuyahoga County Stabilization Fund were awarded a grant. More than one-third of respondents from minority-owned businesses and those in majority-Black zip codes received this type of grant. Across all groups, about two-thirds of those who said they applied received a grant, and there were no significant differences between all businesses and those that are minority-owned or located in majority-Black zip codes.

Businesses were less successful at obtaining assistance from other sources such as philanthropy, municipal and city government, or Community Development Corporations.

A separate question later in the survey asked about other types of grants and loans that the business is accessing to help during COVID-19. Most minority-owned businesses who applied for a Small Business Administration (SBA) program, including Economic Injury and Disaster Loans (EIDL) and the Paycheck Protection Program (PPP) were awarded a loan. Businesses were less successful at obtaining assistance from other sources such as philanthropy, municipal and city government, or Community Development Corporations.

Most businesses who said they applied for SBA programs said they received a loan. However, from the results of this survey, it does appear that applicants from minority-owned businesses and those located in majority-Black zip codes were less successful in obtaining loans from the SBA emergency programs.

BUSINESSES IN THE CITY OF CLEVELAND

The smallest geography that could be analyzed with any degree of certainty was zip code. Seventeen zip codes fall within

the City of Cleveland in whole or in part. Around one-third of the respondents (197) indicated that their business is in a City of Cleveland zip code.As shown in the table, nearly half of responses from City of Cleveland came from four zip codes: 44102 (Brooklyn, Clark Fulton, Cudell, Detroit Shoreway, Edgewater, Ohio City), 44111 (Cudell, Kamm’s Corners, Puritas), 44113 (Detroit Shoreway, Downtown, Tremont), and 44120 (Buckeye Shaker, Corlett, Mt. Pleasant, Woodland).

Close to half of all minority-owned businesses who responded to the survey are located in City of Cleveland zip codes.

Businesses in the City of Cleveland were less likely to be women-owned than the full sample, but more likely to identify themselves as being minority-owned (41 percent compared to 29 percent), a Disadvantaged Business Entity, or EDGE Certified. Close to half of all minority-owned businesses who responded to the survey are located in City of Cleveland zip codes. Most of the City of Cleveland zip codes are areas where the majority of the population is Black. At 27 percent, respondents from Cleveland were nearly twice as likely to report being Black or African American as the full sample. The citizenship and immigration status of Cleveland respondents mirrored the full sample, with 90 percent being citizens born in the United States, 9 percent naturalized citizens, and only a few permanent residents.

Similar to the full sample, about 47 percent of businesses in Cleveland were small, with less than $250,000 in gross revenue in 2019. The industries represented by City of Cleveland businesses generally mirrored the full sample with a few exceptions. A slightly greater share of Cleveland businesses were restaurants and bars, manufacturing businesses, and general contractors, and a slightly smaller share were personal care businesses, including salons and barber shops. However, these numbers were close enough that industry or size is unlikely to explain differences in responses between Cleveland businesses and their suburban counterparts.

Technology Use

Technology is important to businesses in Cuyahoga County, including for businesses in Cleveland. Businesses located in zip codes within the City of Cleveland were more likely than businesses in other parts of Cuyahoga County to be using technology to run their businesses. More than three-quarters (76 percent) of Cleveland businesses said that they have a website, compared to 67 percent of businesses in the suburbs. Well over half of Cleveland businesses were using a money transfer app or tool and/or accepting online payments from customers. Similar to the full sample, Cleveland businesses cited PayPal, Square, Cash App and Venmo as their most popular tools.

Since more Cleveland businesses appear to be using technology, it is not a surprise that businesses located in Cleveland zip codes were more likely to report that technology is important to their growth. As shown below, around 95 percent of Cleveland businesses said technology was somewhat or very important, compared to 82 percent of their suburban counterparts.

The share of businesses reporting that cost prevents them from using technology to expand their business was about the same in the full sample. But in Cleveland, and in the suburbs, Cleveland businesses were more likely to say that cost is sometimes a factor.

More than 70 percent of Cleveland businesses are using cable internet to operate their business, compared to 64

percent of suburban businesses. Although the numbers are small, Cleveland businesses were also slightly more likely to be utilizing a cell phone data plan (6 percent versus 4 percent) or hot spot (3 percent versus 1 percent). Businesses in the City of Cleveland were more likely to be using a laptop computer or their cell phone as their primary device during COVID-19 than their counterparts in the Cuyahoga County suburbs.

Spectrum was the most common internet service provider for City of Cleveland businesses.

Spectrum was the most common internet service provider for City of Cleveland businesses. Nearly half of Cleveland businesses (48 percent) were relying on Spectrum, compared to 25 percent of businesses in other parts of Cuyahoga County. Suburban businesses were much more likely to report that Cox was their internet service provider.

Affordability may be a worse problem in the City of Cleveland than in other parts of Cuyahoga County. Fewer than half of businesses in City of Cleveland zip codes said that the amount they pay for is affordable. However, business internet service appeared to be less expensive in Cleveland than in other parts of Cuyahoga County. Cleveland businesses reported paying $121 per month on average, compared to an average cost of $176 in the suburbs.

Perhaps one factor influencing perception of internet affordability in Cleveland is connectivity. In answers to open ended questions, many businesses expressed that, while they would like to pay less for it, internet was a worthwhile investment for their company as long as it worked well. As shown below, fewer Cleveland businesses rated their internet connectivity as “excellent.” This was the technology factor with the largest spread between Cleveland businesses and suburban businesses.

Trends for the other aspects of technology for businesses in City of Cleveland zip codes followed those of the full sample. Like all businesses in Cuyahoga County, it appears that digital advertising and/or social media are most challenging. However, across the board, Cleveland business were more likely to report that various aspects of technology were poor; they were less likely than their suburban counterparts to report the aspects were excellent.When asked about their biggest technology headache, more businesses in City of Cleveland zip codes identified issues relating to quality of service or connectivity and/or cost than the full sample. According to results of this survey, while more businesses in Cleveland appear to be utilizing technology for their businesses, they report more issues with technology than do businesses in the suburbs.

COVID-19 Impact

Businesses in City of Cleveland zip codes were overrepresented among struggling businesses. Although Cleveland businesses made up 32 percent of the full sample, they composed about half of the businesses that were likely to close within the next six months or one year. All but 4 percent of Cleveland respondents said they had experienced at least some disruption as a result of COVID-19. And businesses located in City of Cleveland zip codes were also more likely to report that COVID-19 has caused significant disruption and they expect the return to services to be difficult.

A greater share of Cleveland businesses than those in the suburbs (36 percent versus 28 percent) reported that they had laid off staff temporarily as a result of COVID-19. However, companies in Cleveland were less likely than their suburban counterparts to have made other changes to their business as a result of the pandemic, including shifting from in-person services, temporarily closing or suspending operations, and delaying the launch of a business or putting an idea on hold. Forty-six percent of Cleveland businesses said that their business could survive for at least 12 months if current economic conditions continued, compared to 41 percent of businesses in the suburbs. Businesses located in City of Cleveland zip codes were also less likely than those in the suburbs to report that their business could survive indefinitely (13 percent versus 17 percent).

Companies in Cleveland were less likely than their suburban counterparts to have made other changes to their business as a result of the pandemic.

On a separate question, more than two-thirds of businesses in City of Cleveland zip codes reported that their sales or revenue had decreased, and an additional 11 percent expected a decrease. For more than half of the Cleveland businesses, the number of customers, the demand for product or services, and the number of employees and their hours or shifts had fallen or were expected to. A slightly greater share of Cleveland businesses reported each of these changes than did all businesses in Cuyahoga County. Although the numbers were small, transportation challenges were also more likely to have increased for Cleveland business owners or their employees as a result of COVID-19, and employee turnover was slightly higher than for the full sample.

Perhaps due to COVID-19, businesses located in zip codes within the City of Cleveland appear to be less optimistic about the future of their company. Twenty-nine percent of Cleveland businesses met the criteria for struggling because they believe their business is likely to close in the next year or their survival is unknown. This share is greater than that of businesses in the suburbs, which was 24 percent.

Business Assistance

According to this survey, Cleveland business were about as likely to have applied for a Cuyahoga County Stabilization Fund grant as businesses in the suburbs. However, businesses in City of Cleveland zip codes were more successful in obtaining grants. Nearly three-quarters (73 percent) of Cleveland respondents who applied said they received a grant, compared to 58 percent of businesses in other zip codes.

Nearly three-quarters (73 percent) of Cleveland respondents who applied said they received a grant, compared to 58 percent of businesses in other zip codes.

Similar to the full sample, the type of business assistance that the most Cleveland businesses reported would be helpful in the short term is marketing, including social media. For businesses in the City of Cleveland, raising capital ranked second, and a greater share of Cleveland businesses said this type of assistance would be helpful in the short term (46 percent) than all businesses in Cuyahoga County (39 percent). Cleveland businesses, when compared to their suburban counter parts, were also more likely to report that assistance with using or upgrading technology, financials or forecasting, and business formation or planning would be helpful. Cleveland businesses were less interested in help to support or manage employees.

The fact that more Cleveland businesses needed help to raise capital fits with the finding that, according to survey responses, fewer businesses in City of Cleveland zip codes have a line of credit or term loan. This is despite the fact that 97 percent of respondents whose business is in the City of Cleveland had a business banking account with a traditional banking institution. The same share of businesses in both Cleveland and the suburbs reported receiving a Paycheck Protection Program Loan.

STRUGGLING BUSINESSES

Community leaders involved in survey planning requested additional analysis of businesses that are struggling. There were two multiple-choice questions on the survey that asked about the future prospects of the business:• How do you feel about the future of your business? (Expect to Close/Unknown)• How many more months could your business survive if current economic conditions continued? (Cannot Survive)We used the answers to these questions to identify struggling businesses. There was overlap between the two groups, and 91 businesses met both criteria to be considered struggling.

Expect to Close Within One Year

A total of 156 respondents indicated that their business will likely close within six months or one year or that they expected their business to struggle and survival was unknown. As described below, there were some notable differences between this group and the overall respondents.

A total of 156 respondents indicated that their business will likely close within six months or one year or that they expected their business to struggle and survival was unknown.

While there were struggling businesses in every level of estimated gross revenue, struggling businesses were more likely to be small—with total gross revenue of less than $250,000. Struggling businesses were more likely to be woman-owned, but about as likely to be minority-owned as the overall sample. However, the respondents themselves were slightly more likely to identify as Black or African American than the overall sample. The future of restaurants/bars and personal care businesses, such as barber shops and nail salons, seems to be of particular concern. Struggling businesses in the “other” category included several live music venues and a number of retail stores and boutiques. This finding is consistent with media reports and other data on businesses that have been seriously impacted by the pandemic and stay-at-home orders.Close to half (48 percent) of struggling businesses said they received a grant from the Cuyahoga County Stabilization Fund. The fact that struggling business were more likely to have received this funding than the overall sample (48 percent versus 28 percent) can be interpreted a few ways. It could mean that Stabilization funds were successfully directed to small businesses in greatest need during the pandemic. It also seems to indicate that those grants were not enough to secure longer-term business viability. These struggling businesses were also more likely to have received a loan from the SBA Economic Injury and Disaster Loan (EIDL) Program or the SBA Paycheck Protection Program.

Nearly two-thirds of struggling businesses said they expect the return to business to be difficult

It is not surprising that struggling businesses were much more likely to report that their business has experienced significant disruption during the pandemic. Nearly two-thirds (64 percent) of struggling businesses said they expect the return to business to be difficult, compared to just one-quarter (25 percent) of the overall sample. Struggling businesses were more likely to have temporarily closed or ceased operations and more likely to have laid off staff permanently. On the other hand, they were equally as likely to have shifted from in-person services to virtual, pickup, or drive-through. This could indicate a lack of capacity to shift how services are provided or may be a feature of the fact that the most common industries impacted are reliant on in-person customers. This is especially true of live music venues and personal care businesses, which still face certain restrictions on capacity.

Not Able to Survive Longer than 12 Months

The second group of struggling businesses includes the 164 respondents who said the business would be able to survive for a period of less than 12 months if current conditions persisted.Businesses across the board are in danger of closing if current conditions persist. Those with estimated gross revenue of less than $250,000, between $250,000 and $499,999, and between $500,000 and $750,000 were all more likely to say they could not survive more than a year than the overall survey sample. Limited Liability Companies appear to be at greatest risk of closure, followed by S Corporations and Sole Proprietorships. Similar to the other measure, restaurants and bars, personal care service providers, live music venues, and retail stores were all more likely to say that they will not be able to survive if current conditions persist.

One out of five of these struggling businesses said their business could not survive if the respondent had to quarantine for two weeks because of COVID-19.

One out of five (21 percent) of these struggling businesses said their business could not survive if the respondent had to quarantine for two weeks because of COVID-19. This is compared to 10 percent for the full sample. An additional 27 percent were not sure if their business could survive their quarantine. As discussed above, businesses in danger of closing if conditions persist were more likely to have applied for and/or received a Cuyahoga County Stabilization Fund award than the overall sample.

Similar to the struggling businesses described above, this group was more likely than the overall sample to say that COVID-19 had caused significant disruption. However, businesses saying they could not survive if current conditions persist were also more likely than the overall group to say that they expect to bounce back quickly after things settle (29 percent to 21 percent). More than half of these struggling businesses reported that they have temporarily closed or ceased operations at some point since March 2020. This is more than double the share of the overall sample who said they had to temporarily shut down. These businesses were also more than twice as likely to have laid off staff, either permanently or temporarily.The businesses who believe they cannot survive if conditions persist appear to be utilizing resources to try to stay afloat. They were more likely than the overall sample to have received assistance from an SBA EIDL or PPP loan, nonprofit or foundation grants, or support from the city or municipality or a Community Development Corporation. As noted above, they were also more likely to be recipients of Cuyahoga County Stabilization Fund assistance.

Needs of Struggling Businesses

This section focuses on the larger of the two groups of struggling businesses, those who said their business could not survive longer than one year if current conditions persist. Businesses were asked, “What type of business assistance resources would be most helpful to you in the immediate future and longer term?” Similar to the full sample, more than half of these struggling businesses indicated that marketing assistance, including social media, would be most helpful in the short term (6 months to 1 year), 45 percent identified website or social media management or content development, and more than one-third (39 percent) said they could use help using or upgrading technology.

Respondents identified a substantial number of other types of business support that might be helpful. Most involved additional money for the business, and specific ideas included microlending, grants, help with rent costs, and loan forgiveness. Other suggestions included networking, introductions to major opportunities, help finding reliable employees, affordable health care options, information on available government contracts, and marketing assistance.

Thirty-seven percent of businesses that completed the survey are struggling

Overall, thirty-seven percent of businesses that completed the survey are struggling, either because they expect to close within one year or the business cannot survive if conditions persist for more than a year, or both. This statistic fits with other indications of the economic impact of the COVID-19 pandemic, such as persistently high unemployment.While this data shows that hardship is widespread, the larger the business, the less likely it is to be struggling. As expected, businesses that rely on in-person transactions or that have been the subject of targeted closures to prevent the spread of COVID-19 are especially likely to be struggling. These businesses include restaurants and bars, live entertainment venues, and personal services establishments, such as barber shops and nail salons.

Survey results seem to indicate that the need to temporarily close or suspend operations is a key factor in whether a business is struggling. Struggling businesses were about 2.5 times more likely to have permanently laid off staff than the full sample.

CONCLUSIONS AND IMPLICATIONS

Technology

Even prior to the COVID-19 pandemic, businesses were increasing their use of technology and conducting more business online. During COVID-19, businesses in Cuyahoga County are using technology in a variety of ways. For some, their entire business is built on technology and their company would not exist without it. Others see it as a tool to conduct business. Many are relying on technology, especially social media, to attract and connect with customers. Several described using technology to adapt when physical locations were forced to close as a result of public health orders.Results of this survey indicate that the biggest technology-related challenges for businesses in Cuyahoga County are internet connectivity, affordability, and using programs and tools effectively.• Access to affordable, high-quality internet services for businesses warrants greater attention. Network service quality was the most common technology challenge identified by Cuyahoga County businesses, despite the fact that nearly all businesses reported using high-speed internet. Slow speeds, lost connections, and weak Wi-Fi networks were frequently mentioned in response to open-ended questions. Improving the internet infrastructure in Cuyahoga County would help businesses.• Many businesses identified specific one-time investments, such as replacing aging equipment or obtaining a new technology tool, that could help them grow their business. Those needs could be met through technology improvement microgrants. Seventy percent of respondents said that cost prevents them from using technology to expand their business at least some of the time. While the survey did ask about affordability beyond internet cost, in written comments businesses pointed to a variety of pressures.• Businesses indicated a strong desire to improve employees’ skills or add employees to help with social media and online marketing. This could be done via internship matching focused on small businesses. There seems to be the perception by businesses that small investments to build their social media presences could yield large results by enabling companies to attract and retain customers and increase their revenues.• Survey results revealed that a greater share of businesses in majority-Black zip codes and those located in the City of Cleveland have unaffordable internet, despite the fact that businesses in these areas are paying less per month on average than their counterparts in other parts of the County. Network quality appears to play a role in whether a business believes what they are paying for internet service is a worthwhile investment.• Many businesses in Cuyahoga County appear to recognize that technology can enable them to operate more efficiently. Responses seemed to suggest that some business owners believe technology can be a catalyst, enabling them to connect with more customers, increase sales, and boost revenue. However, having the right equipment, training, and time to implement changes appeared to present challenges. The most common ways that businesses are using technology to connect with customers is via online marketing, especially through social media platforms. There appears to be a strong desire for additional training on the effective use of social media and online marketing tools.• Many respondents seem to be focused on using social media to grow their business. More than half indicated that marketing assistance, including social media would be helpful in the short-term. Businesses were also most likely to rate digital advertising and/or social media as the aspects of technology that were poor or fair.

Business Support

The COVID-19 pandemic and public health measures to slow virus transmission have upended nearly all aspects of life. Many companies in Cuyahoga County indicated that the return to business will be difficult after things settle. Several said that they would not have been able to remain in business without emergency financial assistance, such as PPP or Cuyahoga County Stabilization grants. Others indicated that more help was needed. Businesses classified as “struggling” were more likely to report experiencing COVID-19 impacts.

Decreases in sales, revenue, and number of customers is widespread.

Decreases in sales, revenue, and number of customers is widespread. Only one respondent indicated that their business had closed permanently because of COVID-19, but many were concerned that they would not be able to remain in business the longer pandemic-related restrictions remained in place.Nearly half of businesses classified as “struggling” in the survey received a Cuyahoga County Stabilization Fund Grant, suggesting that these resources were targeted according to need. However, for many businesses, that support may not be enough.In responses to open-ended questions, businesses identified a number of specific financial pressures. The challenge of covering the regular cost of doing business, including utilities, rent, and payroll were acute. Businesses in Cuyahoga County are doing their best to remain solvent, and many expect the recovery to be difficult.

Raising capital was lower on the list of business assistance resources that respondents indicated would be helpful.

Raising capital was lower on the list of business assistance resources that respondents indicated would be helpful. However, different types of financial assistance, including grants and loans, were by far the most common other type of needed business support respondents identified. Grants and low-interest loans were frequently identified, especially unrestricted funding to “float” the business during COVID-19. Flexible capital with flexible underwriting is critical and should remain a top priority for recovery efforts.Many businesses mentioned challenges when seeking additional capital. These ranged from not wanting to have a loan they were unsure they could pay bank to the complexity of applications processes, and several respondents pointed to frustrations about their business not being seen as a good candidate for an infusion of capital. It is clear that many businesses in Cuyahoga County face an uncertain future. The results of this survey could be used to target assistance to help speed recovery.