The Impact of Coronavirus (Covid-19) on the Global Economy
It is quite common for a virus to mutate and jump to new species. It is a phenomenon known as cross-species transmission and it happens all the time. What is unheard of, however, is for a virus to be able to jump from a living, breathing host to something more abstract like the global economy.
Yet here we are.
Coronavirus, it seems, has not simply impacted the global economy, it has somehow managed to infect the global economy. All over the world, we are seeing the effect of a sick economy on the small business sector as more and more companies go out of business every day. The global lock-down may well be over but the global economy has far from recovered. The USA, the UK, and Europe are all suffering. No country or continent has escaped the devastating impact of the pandemic.
As news of the outbreak of novel coronavirus first went viral, politicians around the world quickly started to close down their countries with no real understanding of the effect that it would have on their national economies let alone the effect it would have on the global economy. The global lock-down may have saved lives but it came at great cost and caused truly unprecedented economic damage. That was, however, just the beginning. It is far from over and things have got a whole lot worse since then.
The Impact of Coronavirus (Covid-19) on Small Business
Small businesses are the lifeblood of a national economy. Small businesses all over the world are struggling to stay afloat in a sea of new rules and regulations designed to curb the infection rate. Whilst many of these rules and regulations may seem practical and necessary, they often inhibit small businesses to the point of rendering them economically unviable. A multi-national fast food chain may be able to absorb the reduction in business due to social distancing measures, for example. A small family-owned restaurant will struggle to do so much more.
The effect of a rapidly declining small business sector on the health of the global economy is all too predictable: As more companies go out of business, more people lose their jobs, meaning they have less money to spend, meaning more even more companies will go out of business, meaning even more people will lose their jobs, ad infinitum. It becomes a vicious circle that quickly tears apart a nation’s economy.
The Small Businesses That Have Thrived
Whilst it is true that small businesses all over the world are facing unprecedented challenges, there are some businesses that have not only survived in this new reality but have actually thrived. Some niche manufacturers, for example, have simply repurposed to begin producing Personal Protective Equipment such as masks, shields and sanitizer. It is called pivoting. It is not a new concept. It is just a new name for something businesses have done since the dawn of time. Starbucks didn’t start off as a coffee shop franchiser, it started off selling coffee makers and wholesaling coffee beans. At some point they decided to pivot their business model and the rest is history.
Some small businesses have used the pandemic as an opportunity to move their businesses fully online where they don’t have to worry about reduced footfall or social distancing measures for example. Other small businesses have innovated new home delivery methods. Major economic disruptions can be difficult for a business of any size to navigate. A small business almost by definition, however, will not have the cash reserves to sit this out. Instead, small businesses need to be proactive and innovate where possible, try to think outside the box.
The Help Available
Most governments around the world are trying their best to help small businesses navigate and survive these challenging times. The British government ran a month-long initiative recently, for example, called Eat Out To Help Out. In a bid to bolster the hospitality sector diners got to eat out for half-price, effectively halving their bills with the British government. Other countries have also run similar schemes.
There are also a range of loans, grants and other interventions available to help small businesses. To find out what is available in your country visit your government’s official website.