As the Coronavirus cases spread all over the world, small businesses are starting to feel its full impacts, which has negatively affected their day to day operations. Most of them are staring at future possible closure or drastic changes as the virus continues to ravage the entire world.
The issues of concern for these businesses arising from this pandemic are as below:
Loss of revenue
This has resulted since there are no customers to be sold to as most of them are following the directives to stay at home. The hotels are facing booking cancellations which have greatly affected their incomes. Supermarkets have been unable to restock due to lack of supplies hence unable to sell, especially non-essential items. Contracts for most services have been canceled hence no revenue will be expected for the foreseen future. Also, Universities, cultural and sports centers are being shut down of which most small businesses rely on.
Since these businesses will be unable to tap funds to finance other activities, they will be compelled to cut costs by laying off employees. They will be unable to pay their salaries and benefits and keep up with any other costs arising from keeping the said employees.
Lack of profit and growth
The pandemic is gutting on businesses’ profits due to loss of sales and the ever-increasing bills affecting not only their ability to borrow money but also their ability to keep operations afloat. This is also making them unable to meet their financial obligations like paying rents, taxes, loans, and bills and halt various investments and even declare insolvency. The small businesses’ fortunes are declining rapidly hence limiting their chances to stabilize and grow. They have also been forced to avoid any kind of mergers and purchases due to market uncertainties.
The financial markets are already burdened from the plunges in the stock markets, eating on their business investments making it harder for them to seek borrowings and any other incentives necessary to support operations. For any business to operate smoothly, the economy has to be sane and with recession widely expected, many of them will be closed.
The High cost of supplies
As other small businesses continue to operate, they are faced with the challenge of dealing with the high cost of goods given the current shortage and the quality which can be less reliable. Also, regular vendors are running out of stock which leaves unknown vendors who charge more as the next option. These further leads to the cancellation of the goods by customers due to their inability to afford them.
The economy is on a slowdown and if the pandemic is not contained, it will come to an abrupt halt. Businesses are having trouble getting customers to keep them afloat and opening due to the isolation policy introduced on the populations to avoid the spread of the virus. Even as the businesses grasp with the idea of employees working at home, there are still some challenges with regards to the technology whereby they are not able to cope with the high cost and demand that comes with it.