In light of the coronavirus, the last few weeks have been a whirlwind of changes for businesses and consumers. The spread of the pandemic has brought local and national economies to a slow halt, not to mention the effect that these slowdowns have brought to the global picture. For many small business owners and entrepreneurs, the toll on their bottom line and feasibility of operations was immense. As people were told to stay indoors as much as possible and avoid gathering in public spaces, companies that relied heavily on the physical components of consumer transactions were hit the hardest. As the world now looks to find a new normal in a post-corona environment, entrepreneurs have to find a way to gain back any ground that was lost.
The Vulnerability of Startups
Through no fault of their own, small business owners and entrepreneurs suddenly found themselves in the worst possible positions to face the downturn of the economy. Governments around the world instituted the preventative measures to slow the spread and minimize exposure, and the resulting chaos disrupted supply chains, labor, and standard operating procedures. While startups are often the companies with the least wiggle room in their budgets and cash reserves, even global and corporate entrepreneurships like Apple or those run by Hari Ravichandran have felt the consequences of the pandemic.
Productivity Reductions
Because of the assistance digital technology brings to business operations, many startups have adoptions a lean organization structure. While cross-functional roles were made easier with the help of software and digital resources prior to the pandemic, the loss of even one employee can create a serious decrease in productivity for the company. Additionally, the precautions and preventives measures that were established to curb the spread left many of these small business owners having to work from a single location, most often their home. Not only did these individuals have to grapple with the extra workload from reduced staffing, but there were also household concerns that were forced to be addressed at the same time. The mental stress and the pressure to keep meeting normal quotas or sales projections while balancing a home life was a challenge that may not have seemed so severe when first starting up.
Breakdowns in the Supply Chain
The global economy has been a vital part of the U.S. infrastructure, even for small business owners, with imports and exports taking a hit during the pandemic. Most specifically, the number of trade components that have their roots in China have been severely impacted by COVID-19. According to research done by Dun and Bradstreet, about 94% of the Fortune 1000 companies have the center of their supply chain originating in China. Even though it has been a cost-effective solution as the world’s biggest market for industrial goods, China has been the epicenter of the pandemic and as a result, created unprecedented dysfunction in the supply chain. Startups often rely on third-party firms to navigate through industrial, regulatory, and legal operations, but these too have been impacted but the virus. Soft supply chain operations like data acquisitions, customer services, and administrative functions are areas where startups can be particularly vulnerable, and having to move these operations to a remote employment situation can create lag in services delivery.
As most of the startups have relatively undiversified revenue flows, the supply chain is presenting to be a big challenge in terms of both goods and services. This obstacle will create problems like meeting the deadlines and orders in the short-run and impact the goodwill in the long-run.
Facility Closures
Apart from what have been deemed necessary businesses (those in healthcare and certain retail settings), many facilities have had to close in order to comply with social distancing requirements. The closure of its operating facility or restricting normal operations deeply impacts a startup’s performance. Many of the management systems and operations of new business (think coffee shops, restaurants, and boutiques) aren’t able to be moved online. This has caused major concern for current situations, but also raised a lot of questions for future operations. In the post-corona economy, many businesses may look to keep their operations virtual and make full use of digital platforms. For some startups, this wouldn’t be a viable option.
Financial Resources
In this time of uncertainly, many startups have found support from local community members, local or federal government programs, or lender initiatives. While the federal government offers support through the Small Business Administration for initial startup funding, those businesses hit hardest by the economic slowdown have been to receive additional government support through extended tax filing deadlines, the individual stimulus payments, and funds available through the Economic Injury Disaster Loans of Small Business Association.
The business world will never return to the normal that existed prior to COVID-19. Entrepreneurs and small business owners have a new world to navigate if they are to stay profitable and enjoy long-term growth.
