The year 2020 brought with it the Covid-19 pandemic, which changed the way the world lived! The closing of businesses and stores around the world due to the Coronavirus spread was never seen before. Factors such as health concerns, law enforcement, low demand of services, etc. led to the shutdown of various stores, factories and businesses. Some of these shutdowns may even get permanent due to owners’ inability to pay ongoing expenses and survive the shutdown. Thus, we can expect a severe impact of Covid-19 on local businesses!
This article will hence discuss the current and possible impacts of Covid-19 spread on local businesses and a few ways to keep businesses alive amid and after the pandemic.
A Few Statistics:
- “Pandemic has impacted 82 percent of small businesses, according to a new survey” reads the headline of an article published in the Economic Times on April 22, 2021 (Article link: https://bit.ly/2S8a7Id).
- About 3.3 Million active business owners had to shut their businesses down during February 2020 and April 2020.
- Total hours worked by all business owners dropped by 29% during the lockdown.
The lockdown caused due to pandemic led the demands of services and goods to lower or even disappear. Also, owners couldn’t access the market to get raw materials or goods. These aspects led to a decline in income generation of business owners.
In the past two years, most major industries have faced large drops in the number of active business owners with the only exception being agriculture. However, large businesses were less affected than small ones. Construction, restaurants, hotels, transportation, and personal/laundry services all faced large declines in the number of active business owners due to COVID-19. According to recent research by Federal Reserve, only 35% of small businesses were healthy at the end of 2019, and that the less healthy ones were more likely to shut down in response to the pandemic.
The intensity of the impact differs from sector to sector. However, few sectors have been hit the most and might continue to suffer until life turns back to normal. Let us have a look at the most affected industries:
Tourism and Hospitality Industries:
Tourism is one of the most labor-dependent industries in the world. Several countries are even dependent on this industry to run their economy. The Covid-19 outbreak has made the tourism and hospitality industries see their worst times. The travel bans, border closures, event cancellations, quarantine requirements, and fear of spread, have placed extreme challenges on the tourism and hospitality sectors. Guides, tour operators, vehicle drivers, hotels, restaurants, shops, and other facilities related directly or indirectly to tourism have thus taken a hit owing to the spread of the virus.
The Micro, Small and Medium Enterprises (MSMEs) were out of action during the Lockdown. Several reports suggest how MSMEs are suffering under the crisis and that they have no money to pay their employees. Even after getting support from the government, many of them are unable to generate revenues.
The automobile sector saw a sharp drop in production and sales. With most of the plants shut, big automobile manufacturing companies have announced pay cuts and are waiting for a decision on the resumption of dealerships. The automobile sector relies on many other small sectors that manufacture key parts, used for manufacturing vehicle components. Thus, owing to the shutdown of many small industries, the automobile industry is struggling to boom again!
Real Estate Industry:
While construction activities have resumed in some areas, there are many hotspots areas in urban areas where key construction projects have been put on hold for several weeks due to the lockdown. This has led to unemployment among millions of migrant laborers, who are engaged primarily in construction activities. Hardly anyone of these laborers, who live on daily wage, have additional savings to see off the lockdown period.
Now, let us dig into knowing which industries have been least affected by Covid-19:
Healthcare and Pharma Industry:
Governments and companies alike are giving enough effort into improving healthcare infrastructure. With an increased focus on pharmaceuticals, PPE kits, testing kits, and hospitals, this has been one of the obvious sectors to not suffer any major setbacks. Now, there will be an increased focus on health. So, further investments may be made into this sector.
As a direct effect of the lockdown, there has been a considerable surge in the usage of telecom facilities. People are now increasingly relying on mobile data and the internet to communicate with each other. The sudden increase in the number of professionals working from home has also led to increased usage, to the extent of putting a strain on the infrastructure giving rise to bandwidth issues. Now, more companies would look at continuing with a remote-work policy. For example, TCS is considering making 75% of its vast workforce work from home by 2025, which means other companies will also follow suit soon – all leading to a bright future for telecom.
Video Streaming Services:
Video streaming services are the obvious benefactors of people staying at home all the time. There’s been a marked increase in streaming service usage, as people spend more time at home, and use this as an easy entertainment option. Some services are trying to further ramp up the competition by offering discounts on subscriptions to lure customers away from established services. Although the shooting of new content has slowed down because of the lockdown, it looks like users are more than happy with the existing options.
The crisis could not affect the insurance industry much. One of the main reasons could be that insurance is not a cyclical industry like other financial services, and has remained fairly immune to up and down cycles in the economy. Also, insurance is taken by a small section of the population and it has minimized the impact on the sector. The government has even directed insurance providers to include COVID-19 in their cover and to quickly process any claims.
Now that we’ve assessed the wide-ranging impacts of Covid-19 on local businesses, let us have a look at the ways which we can employ to get back on track again!
The world has now started adopting the influence of Covid-19. But now your business will require more than usual. Business owners will now have to balance between surfing safely and working with the new practices that Covid-19 has introduced.
Be prepared for new Covid waves:
Businesses with effective planning strategies will make smart financial decisions, which has now become crucial. Thus, your business will always be afloat even if such challenging times come back.
Rethink the workplace:
Many businesses have now started working remotely considering the new normal. Organizations now need to supplement their businesses with cutting-edge technologies and processes. For this, organizations will have to prioritize cooperation, communication, and accountability.
Try to adopt Customers’ new expectations:
For obvious reasons, what customers will now expect from businesses will change. Thus, it becomes imperative for businesses to adapt to customers’ changing needs. Try to create a digital customer journey and reshape your narrative.
Have a concern about your workforce:
Understanding the expectations of your employees is now a part of rebuilding. By placing their employees at the center of all decisions, companies will cultivate trust with their workforce, customers, and stakeholders.
Give your Business an online presence:
Now that everyone is online, chances are high that your potential customers will want you to get online too! Each person averagely spends six hours a day on the web, making it a larger avenue than any other medium. Business websites are open 24/7 which extends your service beyond office hours. Watch these trends to increase your online visibility.
COVID-19 has been a significant economic challenge to millions of small businesses in the World. Government and Business owners with some effective and digital strategies can work to keep businesses and the economy afloat!