The Covid-19 pandemic has ravaged different sectors of the economy, affecting many businesses, both big and small. However, small entities were hit the hardest across the US following the lockdowns and regulations enforced to control and reduce the spread of the coronavirus. Read on to learn how Covid-19 is impacting small businesses across the US.
Insufficient Funding
Many small businesses stopped operating as a result of the lockdowns implemented to halt the spread of the virus. Even to this day, the pandemic persists, and this means that small business operators are unable to generate enough revenue. These businesses also have to afford their employees’ salaries, but it seems that the employment providers are also running out of funds. Some business owners received the Paycheck Protection Program (PPP) loans to pay the employees, but many have exhausted the funds.
Growing Secondhand Retail Sector
Consumers and shoppers who feel the financial burdens of the Covid-19 pandemic now prefer to buy second-hand goods, including clothes, electronics, and furniture to save money. As a result, the secondhand retail sector, especially the online market, has seen tremendous growth during the pandemic. That is why more and more people are considering opening a new consignment shop, as this kind of business does not require large amounts of money to build. At the same time, small business owners who do not have sufficient savings, are resorting to borrowing money from family, seek government assistance, or apply for Small Business Administration loans.
Disrupted Supply Chains
The global coronavirus pandemic has disrupted various supply chains, and this has had various adverse effects on small businesses. Without access to goods and other supplies, many small retail companies are struggling to keep their businesses afloat. Some companies have also experienced huge losses as a result of delayed or canceled deliveries that they couldn’t fulfill due to lockdown restrictions and travel bans.
Reduced CashFlow
According to research, small businesses in the US make up about 50% of the entire private sector. Without sufficient cash flow from their operations, many small businesses find it difficult to carry out their operations and resume production. Moreover, many starting companies and small local brands are struggling to meet their sales goals due to a lack of demand. Unless they acquire enough funding, these companies will fail to generate enough revenue to stay afloat.
The Covid-19 pandemic has impacted almost all sectors of the economy, and small businesses are struggling the most. The main challenge with small businesses is that they do not have strong balance sheets like larger corporations since the majority of them rely on the monthly revenue they generate. Many small companies may not survive if they stay out of business for extended periods. The pandemic has also disrupted the supply chains and delivery processes in many small organizations and local businesses. However, those who were able to adapt by offering their services and selling their products online have managed to survive. Some sectors like the online secondhand retail market even grew during the pandemic.