Since the start of the year, the Coronavirus disease has spread expeditiously across the world, affecting daily life in almost every country. In the last 30 days, the USA has seen a tremendous increase in the number of reported cases and now is in the lead with more than 150,000 diagnosed cases. The spread of the virus is developing at an accelerated rate and there is no definite answer to the question: when will this madness stop? Because of the uncertainty in which we live right now, it’s extremely difficult to determine the long-term socio-economic impact of the 2019/2020 Coronavirus pandemic.
Even though we still find ourselves in the early stages of the outbreak, many small and medium-sized businesses already feel its effects. With the business landscape radically changing these past few weeks, the impact of the Covid-19 on business owners and personnel is staggering and likely to be substantial. With the general public practicing “social distancing”, entrepreneurs are being obliged to take radical steps in order to continue to operate and many are rightfully fearful about their future. For the greater part of small businesses, all of this craziness means downsizing in an insecure future, yet there are some business entities that are going to peak during these dark times.
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First and most important, the number one priority is to stay safe and take care of yourself and your close ones. Managing a small business in the midst of this chaos can amplify stress and before you rush into action never forget that your health and well-being is by far the most important thing. As doctors and scientists predict, this situation is a marathon, not a sprint – and it’s of the highest importance to keep your composure and stay in good health.
In this article, we’ll lay out what we understand of how Covid-19 is impacting small businesses, how to minimize the losses and which steps to take to protect your business as much as possible.
The impact on small businesses
Small business owners are beginning to feel the early impact of the crisis, such as lost sales and supply-chain problems. According to a poll by the National Small Business Association answered by more than 950 small business owners from different industries on how the virus is impacting their business, and the results state the obvious. Almost half of the small business enterprises have already experienced reduced customer demand for their products and services; 75% small business owners say they are extremely concerned about the economic impact of Covid-19 and more than 50% of them are anticipating a recession in the upcoming year compared with just 14% in January. The business owners acknowledge the strong impact of the pandemic and they will need to prepare for the questionable economic period that’s about to follow.
Social distancing is embraced as a key government strategy to handle the pandemic, but these measures make a significant economic impact in various industries resulting in lost sales. The aim of such a measure is to “flatten the curve”, meaning to slow the rate at which the virus is spreading so we will have a manageable number of critical cases over a longer period of time. Yet, for a great part of businesses, this means they are cut from their customers and their sales are going down.
From what we know already, Boston rescheduled or completely shut down several events that were meant to host around 50,000 people; the Bay Area has seen a drop in small business gross receipts of around 70%; Washington state shows signs of economic disruption with social distancing going into full effect.
Notorious fact is that all industries have been affected by the Coronavirus pandemic, yet some bear the brunt of the downturn much more than others. For instance, the restaurant industry is one of the first that comes to mind as the Centers for Disease Control and Prevention (CDC) recommended avoiding groups of over 50 people. Many cities and states such as New York City told restaurants to switch to takeout only and millions of jobs in the sector could either be lost or severely impacted by the outbreak. The bigger issue here is the hourly workers in the industry that will be let go as restaurants get less business. This jeopardizes some of the least-financially secure workers in the US whose jobs are often part-time and get paid less than others.
With over 1.6 million Americans employed in the U.S. hotel industry, demand for hotels and all kinds of accommodation has declined sharply as people are staying home and not traveling much. As indicated, a supplemental aid package to help hotels through the pandemic is a high priority for the government. All of a sudden, people who rent their properties via Airbnb and similar platforms are left without their regular monthly income and forced to play the waiting game.
Movie theaters felt the impact of the “social distancing” recommendation, too. As the CDC has requested that Americans avoid gathering in groups of 50 or more, movie theaters have no other choice than to shut down. As a result, U.S. box office revenue for the weekend of March 13-15 came at just $54 million, the lowest since September 2000.
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A number of stores have already closed their doors leaving the U.S. retail industry in a terrible state. Apple has decided to close all stores outside of mainland China until further notice and other retailers in tech, sporting goods and fashion have made similar announcements. Small retail businesses are affected just the same, resulting in closed shops and with worker’s jobs up in the air.
Already facing challenges from home exercise companies, gyms are one of the hardest hit small businesses affected by the social distancing recommendations and the fear of the spread of the Coronavirus. The mayor of Los Angeles ordered all gyms to be closed until further notice thus leaving a $94 billion industry in jeopardy.
With people staying in and working from home, taxi and transportation companies have seen their ridership dissipate. Many taxi drivers report 50% declines in income in March as fewer people use their services. Other businesses that are facing declines in their work are tech stores, construction companies, food services, shipping companies and more.
Other than lost sales, the supply-chain disruption is another big problem mostly for manufacturers and businesses that thrive thanks to components made in other countries such as China and Italy.
What you can do about it?
Panicking and impulsive decisions are not going to help your business make it past these dark and uncertain times. It’s the right time to bolster your defenses so you can maintain your business’s short and long-term financial health, make sure your employees are kept safe and your business can return to normal operations as soon as factors you cannot control allow. Here are a couple of ways that can easily mitigate the impact of coronavirus on your small business:
#1 Encourage employees to work from home
Kudos to the people who work in pharmacies, banks, and restaurants because not every business is fortunate enough to be able to function and operate online. As previously mentioned, the coronavirus requires contact between humans in order to spread along. The best way of tackling that issue is to let your employees work from their homes if possible. Besides keeping your employees healthy, it will also boost productivity. In accordance with survey data, employees who work from the comfort of their home worked an average of 1.4 more days per month than the ones who worked in the office.
#2 Prepare a business recovery plan and take care of your people
Considering the unknown variables surrounding the latest Coronavirus outbreak, businesses have to evaluate their preparedness to the impact it may have on their operations, employee well-being, and supply chain. It’s way easier to come back from a critical period by following a thorough plan rather than trying to fix everything at once.
To begin with, make a list of the kinds of interruptions your business might expect whether it’s supply disruption, product shipment or anything similar. If possible, find alternative ways to get components and supplies you use. Make sure to have all necessary data and files backed-up on a secure location just in case. Take care of your employees and make sure everyone knows their position and tasks during the outbreak. Without proper management and open lines of communication, your business may experience hysteria and panic and that’s everything you should avoid by all means. Support the health and wellness of your people and make sure they know that their employer has got their back. Make sure everything you do is according to the laws and regulations of your area.
It’s really hard to predict the future and what challenges may occur but preparing for the outbreak will eventually pay off. As mentioned before, preparing for any event is not as difficult as reacting too late.
#3 Adapt and use digital tools to continue to serve your customers
Because of “social distancing”, your business will likely experience a dip in customers and overall sales. What do you do in times like these? You go online! Look into setting up a basic online store if you aren’t already selling online. Many store owners are offering pick-up services, meaning customers can call or email ahead of time with the items they are looking to buy, and pick up a sealed order without entering the store. A lot of restaurants are offering contactless and non-contact food delivery.
It really depends on the type of business you are running, but do explore the possibility of people doing remote work together and serve your customers online before you make a decision to close it down temporarily. For instance, gyms and fitness centers offer personal training via video calls and many yoga studios are doing the same.
#4 Get the correct message out to your customers
As soon as you have implemented all recommendations for operating your enterprise safely, communicate it to your customers to ease any of their potential worries.. Make them aware that you are taking the situation seriously and share the policies and processes you are about to follow.
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Include any important messages such as product availability or working hours, so your customers will know when they can visit you and what to expect. If you operate through a physical location, make sure you put up a sign in your storefront with all the necessary information you would like your customers to receive. Do not forget to update your website homepage, update all of your business listings, post an update on social media and send an email to your subscribers.
#5 Follow the measures issued by the Government
In an effort to relieve economic uncertainty due to the Covid-19 pandemic, the government has proposed four measures aimed to provide financial relief to small businesses.
The measures issued so far include low-interest loans guaranteed by the Small Business Administration, employer tax credit, Government cash payment, and tax deferments.
Make sure you are up to date with everything that is important and concerning your business entity in order to take action if necessary.