The coronavirus (COVID-19) pandemic has had drastic impacts on the economy as a whole. Economic analysts are seeing more impact on small businesses than larger ones because small businesses in generally less likely to be equipped to handle emergencies. Their revenue streams, disaster recovery processes (if they have any), and emergency financial reserves are not as well-developed, on average. For the small businesses that are still hanging in there, how exactly are they doing it? Fortunately many of them have received assistance from federal and state governments, though many analysts and experts question whether that assistance would be necessary without the lockdowns promulgated by the same federal and state governments. Beyond that, here are how small businesses are surviving COVID-19.
For almost all small businesses the biggest cost is personnel; salaries, benefits, etc paid to employees. When a small business is directly told it cannot operate by the government or indirectly not able to operate because all of its potential customers are told by the government they cannot patronize any businesses because they must stay home, its revenue falls drastically. Without revenue a small business can’t afford to pay its employees so mass layoffs were the first thing to happen and expected. Analysts are still trying to wrap their heads around never-before-seen graphs showing such steep increases in unemployment and unemployment claims. But even after cutting the cost of paying personnel, small businesses have many other big hurdles ahead on the road to survival.
Again, many small businesses received financial assistance from state and local governments. But that assistance has typically still amounted to overall losses for small businesses as the amount of that assistance is typically not 100% equal to what a small business would have made otherwise, aka the revenues a small business was making prior to February 2020. Small businesses have been doing calculations on how long they can survive on the reduced revenue and one of the key pieces of information for that formula is how long the COVID-19 pandemic is expected to last. Unfortunately many small businesses expecting the COVID-19 pandemic to last more than 1-2 years have already closed; owners trying to minimize losses and potentially position themselves to re-open a new business when the pandemic is over.
For small businesses where it is possible, many have shifted the remaining personnel to working from home to reduce the overhead associated with having all employees come into an office. Many have shifted from in-person sales and marketing to online sales and marketing. Lastly, for small businesses fortunate enough to have the options available, they dipped into emergency cash reserves or alternative private/nongovernment sources of funding.