Using sales data from a major payment processor covering 15 million small businesses with

$123,000 median annual sales, we analyze how temperature shocks in the local area impact

small business sales, store visits, and closures. Through event study regressions using

weekly sales from recent years, we document a 2% decrease in weekly sales revenue when

the average daily maximum temperature during the week exceeds 100°F and a 10% decrease

when the average daily minimum temperature falls below 32°F. Using monthly sales data

from 2006 to 2023, we find that small businesses experience a 7.2 (11.6) percentage point

reduction in sales per median impacted day during historically unusual heat (cold) shocks.

Aggregating to the county-industry-month level, we find lost sales of 12.8% per median

impacted day for heat shocks, suggesting that some of the sales, especially discretionary

spending, do not transfer to normal days. A one standard deviation increase in hot days

(8.4 days) raises the small business exit rate by 4.7%. In contrast to the previous literature,

our results show that heat and cold shocks can adversely impact small business sales. Our

findings underscore the need for targeted policies to enhance the climate resilience of small

businesses.