CoViD-19 has had an unquestionable effect on small businesses and for an overwhelming majority of them this effect has been negative. Most small businesses only have 27 days of cash in reserve and because of this many of them have been forced to close their doors; some temporarily and some permanently.
In response to economic changes cause by CoViD-19, many businesses have needed to partially or significantly reduce their operating hours. This has had a profound effect on those that rely on these businesses for their livelihood. For employees of small businesses it is estimated that workers are losing up to $2 billion per day in wages, and have so far lost upwards of $26 billion. If these businesses are forced to stay closed for months longer, many of them could be forced to close their doors forever.
There are around 32 million small businesses in the US, and experts suspect that up to 7.5 million are at risk of closing in the next 5 months and 3.5 million are at risk in just the next 2 months. More than 35 million Americans could be looking at unemployment if the worst case scenario comes to pass. Although, even at this point, a small sector of small businesses are not being impacted nearly as severely and expect to remain open indefinitely. Some businesses have even seen a positive trend caused by CoViD-19. Though experts suspect that this may only be a temporary uplifting due to consumers shopping in a panic for goods they consider essential.
Why exactly are small businesses struggling?
Other than the general issue of forced closures, small businesses are reporting economic struggles because of slower sales rates, supply chain disruptions, and staff shortages due to sick employees.
What do small businesses need to survive this crisis?
First and foremost small businesses need support from the government and the leniency to pay back any loans on a reasonable schedule. Another incredibly important factor is that now, more than ever, our local businesses need the support of the community. Small businesses also need to do their best to take their financial survival into their own hands. So far, around one third of small businesses have gone to their bank or the small business administration about their finance options, and even more have reported they plan to do so soon.
Adapting to the times
Many small businesses are now learning that having some form of e-commerce is essential in this day and age of technology. This crisis has made this incredibly obvious. Nearly two thirds of all small businesses have no form of online commerce and this has further increased their economic suffering. Some small businesses are now desperately trying to transition into doing business online. Businesses that already have some form of e-commerce are somewhat more secure since they are able to continue to operate even with a physical location closure.
It is imperative that small businesses pivot now! Don’t just think outside the box, throw the whole box away. Small business owners must find new ways to innovate and meet their customers’ needs post CoViD-19.