How Covid-19 has affected the Small Businesses
The outbreak of the Covid-19 pandemic has severely affected every aspect of life. Including the global economy which is heavily dependent on small businesses. With the adverse effect of Covid-19 on small businesses. They have been forced to move towards digital technologies for the cause of business sustainability.
You might be aware of the disastrous influence of the pandemic on our daily lives, jobs, education, and health. But in this article, we will be discussing its adverse effects on small businesses and how can you coop up with the situation.
World Economy, Small Businesses & Covid-19
The world economy also referred to as the global economy is the combined economic activity. Within each country and among all the nations around the world.
The alarming speed with which Covid-19 has spread and infected millions brought the global economy to its knees with many countries on the brink of bankruptcy. According to Asian Development Bank (ADP), the pandemic has the potential to cost the World economy between 5.8 to 8.8 trillion dollars. The International Monetary Fund (IMF) estimated that the World economy might diminish by roughly 3%. During the pandemic but the outcome of the global recession was 4.8%. Which is considered to be the worst decline since the Great Depression of the 1930s.
World Trade Organization
According to the World Trade Organization, small and medium-sized businesses contribute over 90 percent to the global economy. It would not be an exaggeration if we state that small businesses are the backbone of the global economy. Hence the reason for the global recession was the adverse effects of the pandemic on micro, small, and medium-sized businesses. According to many surveys and research, almost all businesses from all the sectors, especially small enterprises, faced the wrath of Covid-19, facing several issues such as supply chain disruption, reduction in sales, decrease in demand, and unavailability of raw material, among others.
The National Center for Biotechnology Information had surveyed the early impact of Covid-19 on small businesses in the United States. They have found that the active business owners plummeted by 22% in just the span of two months, February to April 2020.
In July 2020, Proceedings of the National Academy of Sciences (PNAS) of the United States of America had presented their findings of a survey on the impact of Covid-19 on small enterprises in the United States. The result showed that 43% of small businesses went to temporarily shut down in just a few weeks into the pandemic. It also stated that the majority of the small businesses were not ready to face such crises and survived for roughly two weeks on cash at hand. According to the survey by World Bank, 26 % of businesses were non-operational during the pandemic.
The Era of Technology in Small business, Boosted by the Pandemic
Even though Covid-19 had frozen many businesses all over the world for quite some time. Business owners are habitual in dealing with crises and coming up with solutions. The study shows that the businesses community had responded faster than expected. Towards the crises and meet the global challenge by utilizing the weapon of technology. Those business owners who adopted digital strategies at the right time have recovered their short-term losses. And now looking forward to gaining good profits.
The adaption of technology and digital means of businesses had been growing very fast over the past decade but the pandemic has pushed this growth even more. During quarantine and lockdown, consumers moved towards digital platforms to meet their needs, and so did the business community to meet their demands. This has caused an exponential acceleration towards digital adaption. According to a new McKinsey Global Survey, the leap of the adaption is roughly equal to seven years increase.
Long term Change in Small business
Even after the pandemic, the resulting changes that occurred have established their roots. The world has now entered a digital era and Covid-19 was the accelerator. The pandemic has changed our lives, our habits, and the business market. People have been spending more time on social media than they used to in this past. They are doing business meetings, discussing strategies, sharing business plans, and selling products through the means of digital communication. E-commerce has now taken over the customary brick-and-mortar business stores. According to a report by UBS (Union Bank of Switzerland), roughly 80 thousand brick and mortar stores would close by 2025 due to the rise of e-commerce.
Adaption is a necessity in Small Business
According to DataReportal, 376 million new users have been introduced since July 2019 and the numbers are growing every day with an average of 12 users per second. With this rate, it is not too long since the entire Earth population would be on social media for entertainment and business purposes. Hence in this evolving era, it has become necessary to adapt to the change and utilize digital means of business to compete with the world. If we don’t accept the change and try to oppose it then it is only a matter of time. Before we find ourselves on the losing side against this evolving world. As Albert Einstein once said, “We shall require a substantially new manner of thinking if mankind is to survive”.
The entire World had faced many catastrophic consequences by the Covid-19 pandemic. But it has caused immense harm to small businesses, and hence the global economy. The outcome of worldwide lockdown leads the world economy to a global recession and small businesses to the brink of destruction. Covid-19 has forced the entire world to move towards digital means of communicating. And doing business has accelerated the digital era by many years. Business communities all over the world adapted the market change from brick and mortar business structure to e-commerce for sustainability. For businesses to grow and be prosperous in today’s digital era. They must acquire the means of digital strategy and digital marketing