Since the start of 2020, the Coronavirus disease (COVID-19) has spread rapidly across the world, affecting daily life in dozens of countries. In the past month the US has seen a significant increase in the number of reported cases and small business owners are beginning to feel the impact of the virus.
But just how damaging will the coronavirus be to small businesses in the U.S.?
At this stage, it’s difficult to determine the extent of the long-term impact. But one thing’s for sure – now’s the time to prepare your company and its employees to mitigate the impact of coronavirus on your business’s health
The coronavirus outbreak
Coronavirus Disease, officially known as COVID-19, has been all over the headlines for the past few weeks. According to the World Health Organization, the outbreak of the coronavirus started in Wuhan, China just before the turn of the new year. As we now approach the three-month mark since the first reports, the spread of coronavirus continues.
At this point in time, the WHO has stated that there are over 100,000 confirmed cases of coronavirus around the world. In the USA alone there have been more than 600 cases reported to the CDC, a number that continues to grow. 4 states have even declared a state of emergency and some officials are talking about regional lockdowns – though nothing is for certain at this time.
Okay, let’s all take a deep breath and relax. We aren’t here to fan the flames of panic by any means – there’s plenty of that happening already. As the saying goes, “This too shall pass.” The current advice from government health officials is to wash your hands, limit physical contact, and keep traveling to a minimum. Pretty straightforward stuff, so let’s not get too worked up.
With all of that said, the damage that coronavirus can cause extends beyond human health. It’s also important to recognize how the economy is being affected, and the impact of coronavirus on small business stability. We discuss that just below.
The impact of coronavirus on small businesses
We know that the outbreak started in China, but the impact of coronavirus on small businesses extends farther. There have already been reports of the crippling effect of coronavirus on the American economy.
Social distancing, employees in quarantine, reduced access to supplies, and general widespread fear and unease have all contributed to the economic slowdown – and small businesses are feeling the impact across the country.
Here are a few recent stats that demonstrate what small businesses are going through right now.
Coronavirus’s impact on the USA’s economy:
- Boston closed down or rescheduled several events that were meant to host roughly 50,000 people;
- Washington state shows “signs of economic disruption” as social distancing goes into full-effect;
- The San Francisco Bay Area has seen a drop in small business gross receipts of as much as 70%;
- And stock markets on the whole took a 7% plunge in the wake of panic around coronavirus.
How is small business in China affected by the coronavirus?
While the full extent of the impact is not yet determinable, early reports show that the Chinese small business sector was hit pretty hard. In particular, the entertainment, hospitality and service industries.
In a recent study, 33% of Chinese companies surveyed feel they’ll only be able to survive for a month with the funds they currently have at hand. These statistics are quite concerning, especially considering that more than 60% of China’s GDP is generated by the 30 million small-and-medium-sized businesses in the country.
How will this affect the USA?
Some people may still be saying, “Coronavirus is a China problem, what’s that got to do with the USA?”
Think about this: more than one-fifth of the United States’ total imports come from China, amounting to more than half a trillion dollars in 2018 alone. Imports from China include machinery, furniture, finished fabrics, toys, plastics, metals, and much, much more.
The bottom line: A slowdown in China’s economy could very well harm America’s economy.
Typically when we talk about the “Trickle-Down Effect” it refers to a good thing. But, when it comes to the impact of coronavirus on small business stability – and the economy at large – the trickle-down effect is something we all should hope to avoid.
If your business has stayed out of harm’s way thus far, then good on you. Certain industries may have some tougher times ahead…
1. Manufacturing businesses
It may come as no surprise to learn that many manufacturers get their raw materials and components, whether directly or indirectly, from Chinese suppliers. And assuming that’s not the case, even a small slowdown in production and distribution can make a huge difference for manufacturing productivity. The coronavirus might not have a direct effect on the demand for a manufacturer’s services, but it can definitely affect a business’s ability to supply those services.
Restaurants rely on two main factors to sustain their businesses: food and customers. Without either one, a restaurant will simply tank. Coronavirus can potentially have an impact on both of those factors.
First off, if a restaurant’s suppliers do continue operating, then they’ll likely be stretched thin as a result of other suppliers taking breaks during this time. Food supplies could be interrupted at any time, which would obviously have a dramatic effect on a restaurant’s ability to conduct business.
Secondly, dining out always presents some exposure to germs. But with the news relentlessly going on about it, and the number of reports continuing to climb (even if slowly), customers could become increasingly wary of dining out. Let’s hope it doesn’t get to that, otherwise we might be short on lunch spots!
The bottom line: The impact of coronavirus on your small business could make a big difference to your restaurant budget. Be sure to keep this situation in mind when laying out your budget for the next few months. You may want to look it over now and make any necessary changes.
3. Trucking companies
When we published our trucking industry forecast for 2020, we didn’t take the outbreak of pandemic into consideration. And now that it’s here, we can see that the coronavirus can have a serious impact on the trucking sector – though the impact might not be what you expect.
Reports show that the volume of freight has risen roughly 10% as a result of the panic around the coronavirus. That’s because people are scrambling to stock up on staples like toilet paper, water bottles, and so on. But the dramatic uptick in trucking volume could just as likely turn back around once the panic dies down. In short, the coronavirus has shaken up the trucking industry, and only time will tell whether it ultimately results in profits or losses for trucking businesses.
With all of this volatility in so many different industries, how can you prepare your business to withstand the impact of coronavirus?
How should small businesses react to the coronavirus outbreak?
While concern is warranted, panic is not. It’s just as important to prepare against coronavirus as it is to not let the pandemonium affect your business.
Now is the time to reinforce your defenses so you can preserve your company’s short and long-term financial health, ensure your employee’s wellbeing is protected, and that your business can return to its normal operations as soon as circumstances allow.
Here are three ways that you can mitigate the impact of coronavirus on your small business:
1. Allow employees to work from home
As is the case with other viruses, the coronavirus requires contact between humans in order to spread. The most to-the-point way of tackling that issue? Let your employees work from their homes.
Not only will it keep your employees healthy, it’ll also boost productivity! According to survey data, employees that work from home worked an average of 1.4 more days per month than employees who worked in the office.
2. Have a business disaster recovery plan in place
Whether it’s coronavirus, a hurricane, or any other type of emergency, you should have a business disaster recovery plan on paper that’ll help you survive through difficult situations. That includes having comprehensive insurance coverage, making sure employees know what their responsibilities are, having an off-site backup of documents and data, and so on.
Having an outline of how you intend on handling emergency situations will help you keep a cool head and stay focused when the pressure is on.
3. Prepare a financial cushion
Your business should have a financial safety net in place year-round, regardless of whether there’s currently an emergency or not. Now, in particular, is a good time to take out a loan so you can overcome any potential loss of revenue that might hit your business.
With a business line of credit, for instance, you can keep funds at hand to use in the event that you need them, for essentially any business-related expense. If you don’t end up needing to use the line of credit, then you won’t need to pay any interest.
The CDC’s advice to business owners
The Center for Disease Control and Prevention in the United States has laid out interim guidelines on how businesses and employers should handle the coronavirus outbreak.
Bigger companies certainly have advantages in this situation that smaller businesses simply don’t have, and that’s largely a result of having more resources to tackle the threats coronavirus pose. But that doesn’t mean that there’s no way to mitigate the impact of coronavirus on small business health.
Here’s a short summary of the steps the CDC recommends taking to reduce the impact of coronavirus on small business stability:
- Encourage sick employees to stay home.
The first and most obvious step to limit the impact of coronavirus on your small business is to keep sick employees out of the workplace. Sending ailing employees home should not require official confirmation of coronavirus, or even a doctor’s note. Better to be short on a few helping hands than to have your whole business become infected.
- Keep sick employees separated.
The second step to reducing the impact of coronavirus on your small business is somewhat of an extension on step one. If your employees do come to work and they’re showing signs of being sick, they should immediately be separated from the rest of your workforce and then be sent home. While they are at work, sick employees should be instructed to cover their mouths and noses when coughing or sneezing.
- Instruct employees on how to reduce risk.
Practicing proper hygiene should be something you encourage at all times, not just when there’s a viral outbreak. Start now by putting up posters around the workplace that reinforce the proper hygiene practices that will help avoid the spread of illnesses – coronavirus included. Another easy step is to make tissues and alcohol hand rubs readily available at different spots around the workplace.
- Clean the workplace regularly.
This step should also be followed all of the time, but even more so during the current coronavirus scare. Use disinfectant sprays and detergents to keep work stations clean and free of harmful bacteria. Instruct employees to also do this on their own with disposable cleaning wipes that they can use periodically throughout the day.
- Give employees steps to take if they travel.
Depending on where your employees may be traveling to or from, there may be official government regulations they’ll need to abide by. Even if they choose not to follow those guidelines, your employees should still be instructed to inform you of any and all traveling that they may be planning at this time. If there’s any chance that the employee may have become infected, they should stay home and not come to the workplace.
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Keep your cool
The news is certainly making sure that we all stay aware of the dangers that the coronavirus presents to us. But let’s remember not to let panic take over. Cool heads prevail, don’t forget it!
While lots of the advice provided above is especially useful during the coronavirus outbreak, you can use these tips at any and all times. It’s always wise to stay prepared for the unexpected as much as possible, so be sure to keep this article bookmarked for future reference. And stay healthy out there!