The way of life that we once considered as normal change completely after the World Health Organization (WHO) declared COVID-19 as a global pandemic. While scientists were able to develop vaccines against the virus, COVID-19 had deteriorated the progress small businesses had made in different countries of the world. The worldwide lockdowns and travel ban as a precaution against the virus proved to be fatal to many businesses. Israel Figa talks about some of the difficulties that small businesses have had to face because of this global pandemic.
COVID-19 Impact On Small Businesses
A Decline In Sales
We experienced a global lockdown right after WHO declared COVID-19 a global pandemic. This lockdown was believed to be a two-week-long process with the initial belief that the world will return to its normal state in 14 days. However, the pandemic proved to be more contagious and fatal than anticipated. As a result, more strict measures were implemented to reduce the spread of the disease which included elongated lockdown periods, social distancing, ban on international travel and trade, amongst others. The aforementioned precautions brought a lot of damage to small businesses.
A major decline in sales and services was observed because of ban on trade and travel which was how many businesses got their products. This also had a deep impact on the food industry where restaurants and hotels didn’t have any profits during the lockdown which were further worsened by social distancing restrictions. Israel Figa says that we should be prepared for a “startup depression” in the upcoming years as new business owners will have to learn to sustain their businesses in a post-pandemic world. Previous ventures that had to shut down due to lack of sales and profits will have to develop new strategies for maintaining their business.
Lack Of Cash Flow
COVID-19 has negatively affected all sorts of businesses including international ones, but the ones that suffered the most are small and local businesses. This is because it is more difficult to recover from a blow for a small business than it is for international and large-scale businesses. One of the main reasons for that is that small business owners don’t have the cash flow that is required to maintain the steadiness that big businesses do.
As a way of keeping their business alive, many entrepreneurs decided to downsize and reduce salaries to stay afloat during the crisis. Business owners had to lose a big chunk of their team and further cutback on the salaries of their remaining employees to keep the business running. Many difficult steps had to be taken to make sure that the venture has sufficient funds to stay in business. The idea of downsizing also brought forward the initiative of prioritizing nationals in many countries which led to many people losing their jobs as well as closing down their own businesses.
Despite taking all the possible measures, some small businesses just couldn’t survive the brunt of the force. Unfortunately, many small businesses had to close down completely because of a lack of sales and resources. Small business owners don’t have enough money to keep up with the salaries of their employees when the business is on the low. Moreover, due to trade and travel ban, many ventures were not able to receive their products for months and lost their clientele. As a last resort, many entrepreneurs had to say goodbye to their ventures.
Small businesses need to develop new strategies if they want to stay in business in the post-pandemic world. To help people sustain their businesses, many online courses were introduced, where most of whichwere free, to help people get adjusted to the highly digitized era of small businesses. Israel Figa says that it is extremely important for business owners and entrepreneurs to get accustomed to the online resources for maintaining businesses. This is because the post-pandemic world of ventures is expected to be a highly automatized and digitized era.