The COVID-19 pandemic has led the entire world into a global recession, as local economies are temporarily shut down in the name of curbing the spread of the disease. Small and medium enterprises (SMEs) bear the brunt of the blow, as they do not have the cash reserves that corporations have to tide over the pandemic. They also can’t afford to hire a data science solutions company to help them crunch numbers and generate forecasts for more effective decision making.
Here’s how the COVID-19 pandemic affected SMEs and how they can recover.
The Industries Most Affected
In March 2020, the Small and Medium (SMB) Group surveyed more than 500 businesses to determine the changes that they have experienced since quarantine measures were enacted.
The research showed that the three sectors most affected by the pandemic are: personal services, hospitality, and retail. That is no surprise, as non-essential travels are prohibited in varying degrees. Retail, on the other, suffered a blow because people are either banned or discouraged from leaving their homes.
The smaller the company, the harder the hit. The survey shows that businesses with fewer than 20 employees suffered the biggest blow. These companies, as mentioned earlier, do not have the capital to sustain operations when cash flow is meager. They are the first to lay off employees, reduce hours, and stop hiring subcontractors. They are more labor-intensive compared to bigger institutions, which makes them more vulnerable to disruption, especially with employees moving to a work-from-home scheme.
Adapting to New Purchasing Patterns
A National Small Business Association survey found that three out of four SME owners are concerned about the impact of the pandemic on their company. About half have experienced a slow down in customer demand.
In the wake of the new normal, businesses have to adapt to new purchasing methods by an increasingly remote target market. They have to learn to adjust to the new stay-at-home environment. For instance, retail stores that have relied on store traffic now have to revamp their digital marketing strategies to capture virtual shoppers. They have to update their websites, enable e-commerce features, and streamline delivery services to serve people who can’t leave their homes.
Work from Home
The pandemic has pushed countless companies to send their employees home, creating a massive worker migration from offices to a work environment. It is to protect them from possible virus transmission in the office. Although companies have pledged to keep their facilities hygienic, there’s still a much lower risk of contracting infections if workers won’t leave their homes.
Experts say that, although the economy can bounce back to health, the way people work, buy, and transact with one another will never be the same. Businesses will direct its resources toward investing in telecommunications platforms and digital security to keep their remote workers safe and productive. They will also invest more in social media and web presence to cater to virtual shoppers.
Forbes also said that several banks would work with small business customers to help them, and consequently, the local businesses they support, recover financially. Facebook has also launched a grant program that provides financial support to small businesses. Local community organizations also help pool funds for the small shops in their neighborhood.
The pandemic signals a new era for the SME industry. The shift to new technologies will be painful, but economic experts are confident that they will emerge stronger than ever.