The Effects of COVID-19 on Small Businesses
This is an article “The Effects of COVID-19 on Small Businesses” by Marc Primo
Small and medium enterprises are bearing the brunt of the COVID-19 pandemic, with more than 30 million finding themselves suddenly vulnerable. Even with lockdowns being lifted in some parts of the country, we have already seen a surge in unemployment all over the world, with policymakers in dire straits on how to mend the damage.
Small companies with fewer than 500 employees (those that provided almost 50% of the US’s private-sector jobs prior to the pandemic), continue to suffer due to social distancing and shelter in place implementations. According to recent studies, personal service, hospitality, and retail businesses are the most affected, and the smaller the number of employees, the greater the risk of being shuttered. This is because cash flow is imperative in keeping businesses afloat and those without any crisis contingencies are forced to lay off employees to divert budgets and keep the business in check. Airbnb is one strong startup that was forced to lay-off 25% of its workforce because of the disruption of COVID-19 to the tourism industry.
However, this does not mean that large companies are safer. Hotel giant Hyatt has reported its plan to terminate the services of 1,300 employees in their global network as it copes with the impacts of the pandemic. Marriott is following suit by extending furloughs to tens and thousands of its employees to October 2.
Work from home
Experts share their views on how small businesses should approach the new normal by learning how to do business in different ways. More businesses have shifted to e-commerce as a way to continue their cash flows while adhering to the government’s safety guidelines.
More means of establishing business continuity in the new normal is by investing in work from home arrangements and digital marketing though both might entail additional costs. What’s important is that small businesses learn to adjust and find ways to keep their operations as close to being ‘business as usual’ as possible.
According to one survey, employers can see themselves cutting costs in non-employee spending with lesser need for supplies and capital equipment if they resort to work from home arrangements. Small businesses can also postpone their costs for office space rentals and utility expenses while still enjoying productivity from their employees.
Projections for small businesses in 2020 have turned from 60% saying their chances for revenue increases are very likely during the start of the year, to the same percentage saying they’ll be cutting losses for the next six months. Add to this the mental anguish of both employers and the employees they have to lay-off due to the disruption and we have another economic meltdown that’s very similar to the great depression.
During this time, employers would need to be creative and invest in communication hardware and software to be able to make recoveries during the new normal. Another glimmer of hope lies in how e-commerce platforms are beginning to be the preferred mode of retail for most consumers, which small businesses can take advantage of. Integrating services with other service providers (hiring delivery services for restaurants that were shuttered for example), is another way to overcome the challenges of the times.
Despite the grim reality, small businesses need to foster the resilience to work for business recovery. While the crisis is far from over, adapting to unconventional strategies is the way to move forward and keeping the mindset that everything will be back to normal eventually. All it takes is the same optimism that small businesses had when they started and, given the present situation, comfort in knowing that there is no other way but up.