How COVID-19 Affected Small Businesses?6 minute
About 2 years ago, we all were, somehow, busy planning our next step for making life better. I am sure, some of you were occupied planning your retirement while many of you were busy creating blueprints to start some small business. But then enters COVID-19, this strange infection that creates a whole level of small business problems.
Coronavirus is not just killing people, it has been one of the biggest challenges the world economies have ever faced. It won’t be wrong to say how badly it has transformed businesses, be it small or big.
But many of us are still unsure how exactly did it affect small businesses. Are you still blank about this like me? Okay, let’s see what all we have analyzed.
1. Work for home is the new trend
Honestly, did you start working from home due to coronavirus? Of course, it was the necessity of the time. This is what makes companies and board team re-think their business models.
Do they need their physical offices anymore?
Should they continue working from homes?
Do they need to invest in employees to encourage them at home?
You may think this is stupid but the truth is, over 87% of businesses in India are thinking about shifting to WFH as their permanent option. This is what a survey by BCG-Zoom has found out.
If you ask us- I want to start a small business and how should I do it? Our advice would be to go for something that you can do from home. That’d be the best small-budget business.
2. Virtual delivery of tasks
The biggest impact of COVID-19 on small business ideas is that people are more concerned about finding ways to deal with people online. This is not just about dealing with the target audience but also about delivering their services virtually.
You must be wondering why is that? This is one of those cases where some unexpected things change people’s perspectives. And COVID-19 has done that. Now businesses actually know three main, probably most ignored, pillars to focus on:
- Good market support,
- Adapting new technologies, and
- Credit facilities at their best.
Wanna know one major effect? This coronavirus has made people realize that virtual reality is one of the best ways to keep their business going. They have given a new perspective to their customers. Like, why should they go out and try different clothes when they can try and judge virtually before buying?
Have you tried LensKart’s virtual frame trial? Try it once and see what am I talking about.
Here is something interesting- 82% of businesses, big or small, have digitized their daily operations since the pandemic hit. This is what a study has recorded in which about a hundred businesses were surveyed. Now, how is that affecting their trend? These businesses have recorded a significant reduction in cost and, somehow, enhanced their overall productivity.
Believe it or not, the digital working of any business is like the most successful home-based business available today. Besides, this is one of the biggest reasons why females are taking initiative to support their families via women-owned small businesses.
3. Global to Local
How did coronavirus actually spread across the world? It’s because of people and things traveling from one country to another. Now, to stop this transfer of the virus, many businesses have shifted from the Global to Local market.
Remember last year? Or even this year? We still are somehow afraid to buy those Chinese products? The lack of goods import and export? Canceling of international flights? This is where you can see the effect. Refusal to deal with the international market.
Now, this impact has affected businesses in two ways. One is where more than half of the businesses have lost their essence. This covers both employees and their real cash flow difficulties. However, if we look at the brighter side, many big companies and global manufacturers have shifted their preferences to local workers. So, this is surely promoting that ‘Atmanirbhar Bharat’ or ‘Vocal for Local’ thing.
4. No clue about their growth
Small businesses are a major part of the Indian economy. No matter where you go, you will find those small shops or food outlets where you can buy stuff from. But this COVID-19 has literally shut down the business plans of millions of people.
For instance, due to a few months of lockdown, small businesses have lost like 70% of their annual sale. Can you imagine the amount of loss small business owners have had in the last year? I know many of you are aware about how bad the situation has been.
5. The biggest impact
Have you ever thought about small businesses from service sectors? These are the ones that offer services like food, hairstyling, hospitality, healthcare, and more. Moreover, they cannot offer their services online if they cannot afford to experiment that much.
What we can see is that apart from the medical industry, every other service sector business is losing a lot more than we can ever imagine. Meanwhile, hospitals and pharmaceuticals remain the most profitable businesses in the world. However, that too has the most risks.
This has somehow put real pressure on business accountants who need to re-evaluate the business finances. Be it any rural business ideas, or any other small and medium business.
6. The neighborhood businesses
Okay, how many of you realized that there are temporary small shops or stalls opened up in your area? Was this planned or is it because of the lockdown and covid crises? Anyway, these are those new business ideas that came up in 2020.
26% of small business owners literally used their societies to continue their businesses. This may not work temporarily but will pretty much work as the pandemic subsides.
Many business owners like vegetable vendors, food stall owners, and even barbers came up with the idea of working from home. How? By providing their services just outside their houses.
This made it accessible for both the customer and the seller. Besides, this two-way thing is still working well to beat the virus.
7. Turning crises into opportunities
The fear of the pandemic spread way faster than the virus itself. Yes! We have seen the news, a rising number of cases, death rates, but are they really gonna stop people? At some level, maybe not.
The vision and thinking are what you need to deal with this situation. Like many people out there who have found new ways of working and growing their businesses. Let me give you some example:
- Restaurants are serving people through online orders. They have created new ideas of packaging, contact-less delivery, and more. This is how they are making sure their customers get what they want and there is no transfer of the virus.
- Some business owners have actually made the best use of ‘staying at home’ to find expertise. People are baking, opening marketing agencies, selling their arts online.
How great is that?
8. Staying on track
If we are talking about turning these disasters into opportunities, this point becomes necessary to discuss. Now, many people are innovating or even initiating their business ideas, there are small business owners who are trying hard not to leave the market.
One of the biggest examples is social media. Even if companies and startups are not able to provide their services, they are still using social media to stay connected to their audience. At least they are using their time to market and promote their brands even if they can't offer the services at the moment.
On the other hand, there are businesses that have taken up startup loans and are finding ways to repay them. Basically, this is about dealing with that cash flow disruption. So, people are injecting cash be it via grants or new business loans. This is just like a ‘hanging in there’ kind of situation. But, better to stay focused and be determined than give up on their dreams.
COVID-19 may have scared the hell out of people, but small business owners have gone through a lot more than that. But not every one of them is suffering. Some have made the best of this situation.
So, this is the whole story of how small businesses are being affected and dealing with the COVID-19 pandemic.
Stay tuned for more.