The pandemic is wreaking real havoc, not only on the physical health and mental wellbeing of the world population, but also on the economy itself. If you look at the McKinsey report, the company estimates that nearly 30 million jobs in the small business sector are at risk in the US. This percentage is significantly higher than in private sector organizations. These findings make clear that, although the impact is imminent across all types of businesses, the three categories that seem to be most heavily impacted are hospitality, retail, and personal service. It is a fight for survival, particularly for those with less than 500 workers.
The main reason behind this is the issue of cash flow and capital with these organizations. Due to these financial hardships, smaller entities have to resort to layoffs and reduced working hours. Additionally, they are now reluctant to hire subcontractors. For hands-on service businesses, operations have become a considerable challenge. Whether it is repairs, home improvement, dental clinics, or spas and hair salons, every business is massively suffering. Retail shops that depend on store foot traffic for profit have to re-imagine the methods used to sell their products to customers. So far, they have either modified their sites or social media accounts to adopt online delivery.
A closer look at the impact of Coronavirus on small businesses
A variety of different studies point to the same conclusion:that small businesses are struggling the most during COVID-19 as they account for almost 54% of jobs that are on the verge of disappearing. Most of them are either facing financial constriction or closures. Here are some insights that will allow you to gauge the situation yourself.
- About 75% of small and medium businesses admit that Coronavirushas worse affected them. According to two-third of these companies, they foresee their revenue declining by at least 30% in the upcoming months.
- As mentioned earlier, although the pandemic has affected all industries, the ones that are suffering the most are personal services, manufacturing, and retail. Almost 90% of them are facing massive negative results due to social distancing and lockdown caused by COVID-19.
- Businesses with less than 20 employees are going through an extremely rough phase, as reported by nearly 38% of them. More than 50% of small and medium companies have either reduced employment hours and fired employees or are planning to do so.
Some of the worst-hit cities during the pandemic like New York, San Jose,San Francisco, and Seattle were the first to witness an enormous reduction in working hours due to rising infections before lockdown and closure directives coming in force.
A glimmer of hope
Going by this, there is no doubt that small businesses are moving toward an uncertain future. To bail them out, different initiatives at both personal and governmental levels must be implemented. Optimistically, some measures have already started taking place. For instance, these small entities are eligible for up to $2 million of loans from the U.S. Small Business Administration on low-interest rates. Also, theTreasury Department has extended the annual tax payment deadline by 90 days.
You can expect measures like these and others to give some relief. However, where small and large businesses alike will end up relies ultimately on the extent of control we are able to exert over the pandemic.