Covid-19 has not only impacted public health enormously but also gave the whole world an economic shock. The COVID pandemic has brutally ruined small business activities.
As per the U.S Census Bureau Small Business Pulse Survey August 2020, about 79 percent of small businesses have been impacted by the detrimental effects. According to the Local Economic Impact Report by Yelp.com, nearly 97,966 small businesses shut down permanently during the COVID-19 pandemic.
In most countries, the economy is taking a boost, but small businesses are still struggling for economic stimulus or aid to survive. Another survey done by Facebook states that about 31 percent of medium and small-sized companies have entirely shut down in three months.
The Vice President of Federal Government Relations for the National Federation of Independent Business, Kevin Kuhlman, recently interviewed with Fortune. Kevin Kuhlman mentioned that if the economy seems to proceed the way it is now, about one in five businesses will predict that they won’t survive the year.
The situation is worse for personal businesses such as restaurants, hotels, and cafes. Further, the services like fitness, grooming, and wellness are highly affected. What caused them to close their business?
The majority of small businesses stated the reason for the legal order by health authorities and the government. While smaller firms also claim a lack of client demand and financial challenges as one of the reasons.
Even if they try to keep the business open and functional, they face significant challenges such as lack of access to capital and lower demand.
With minimum access to capital, about 34 percent of small businesses cannot re-open their business as they cannot pay for their rent or other bills. Nearly three out of five firms are struggling with finances in the company. Therefore, it becomes essential to support small businesses.
In terms of access to capital, the most daunting task has been to pay workers. To alleviate the stress of the financial crisis, businesses are helping each other, they are coming out to support the struggled small companies. The pandemic itself has proved to mandate great leaders to overcome many challenges, like keeping their workforce active and their payments on time .
About half of medium and small-sized businesses are applying for capital support from government sources. Besides, 6 percent are used in the private sector for capital grants, and the other 11 percent apply for traditional bank loans.
Large tech companies such as Google and Facebook have stepped out to private grants to small businesses and entrepreneurs with financial expenses. Google offered about $800 million to support the small business. At the same time, Facebook offered about $100 million in grants for small-sized companies distributed in either ad credits or cash for their services.
Another challenge that small businesses face is to balance between home and work life. Most business owners are caught up between taking care of their family and being concerned about bringing the virus home.
It has also negatively affected people’s mental health and dealt with small businesses due to the division collapse between home and work life. Most companies have to lay off employees because of the pandemic.
Anytime the business lays off its workers and closes, it affects the whole community, dependent on the income to support their family. If the firm tries to survive the struggles faced during a pandemic, the employees experience financial cuts.
Not all small businesses are equally affected and faced struggles during the pandemic. Companies which aren’t dependent on customer traffic were able to survive well. But in-person services faced the most troubles.
As per the U.S. Chamber of Commerce report, about 82 percent of jobs from the service sector are lost since February. About 25 percent of jobs in hospitality & leisure are down, while 4 percent of jobs in the Retail industry are down. You can see the difference.
Apart from that, black-owned businesses also faced a good share of hardships. Besides the higher number of black areas, they had more trouble accessing the capital from white business owners and commercial banks.
The industry groups are requesting the government to provide aid to help their businesses. Furthermore, PPP funding was only helpful for a short period as no one anticipated that the COVID pandemic would last this long.
Even though the situation is terrible for small businesses, they try to remain optimistic and bring creativity to the forefront. Companies are trying to adapt to new conditions by getting creative with their ideas.
The restaurants are using the outdoor spaces to create a place for family and friends to gather and have a fun time. Also, most operators have come up with delivery and take-out options for people in quarantine.
The COVID-19 pandemic has made everything turn digital. The internet has now become a source for many small and large companies to boost their businesses. While addressing the live audience, Mark Zuckerberg launched Facebook shops. It will enable small businesses to build an online store on Instagram and Facebook.
The online presence can be a part of their growth strategy and allow them to re-open their businesses. Internet is now a lifeline for such companies, which could help them stay afloat even during the pandemic.
If businesses want to survive the pandemic and overcome the challenges, they have to resilient and optimistic about the future. About 57 percent of small businesses report that they are confident about their business future despite the pandemic.
Small Businesses are finding ways to work, operate and manage. They are making adjustments in their business by adopting new techniques and making adjustments in their operation.
The positive outlook seems great while because about 31 percent of small businesses shut down in April 2020. There is no straightforward method by which small businesses can choose to flourish. However, if they try to adapt to current circumstances and bring solutions, they can survive the pandemic.
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