The outbreak of the Covid-19 pandemic has severely affected every aspect of life including the global economy which is heavily dependent on small businesses. With this ripple effect of COVID-19 on the backs of small businesses, they have been forced to move towards digital technologies for the cause of business sustainability.
You might be aware of the disastrous influence of the pandemic on our daily lives, jobs, education, and health, but in this article, we will be discussing its adverse effects on small businesses and how can you cope with the situation.
World Economy, Small Businesses & Covid-19
The world economy also referred to as the global economy is the combined economic activities within each country and among all the nations around the world.
The alarming speed with which Covid-19 has spread and infected millions brought the global economy to its knees with many countries on the brink of bankruptcy.
According to the Asian Development Bank (ADP), the pandemic has the potential to cost the World economy between 5.8 to 8.8 trillion dollars. The International Monetary Fund (IMF) estimated that the World economy might diminish by roughly 3% during the pandemic but the outcome of the global recession was 4.8%, which is considered to be the worst decline since the Great Depression of the 1930s.
According to the World Trade Organization, small and medium-sized businesses contribute over 90 percent to the global economy. It would not be an exaggeration if we state that small businesses are the backbone of the global economy.
Hence the reason for the global recession was the adverse effects of the pandemic on micro, small, and medium-sized businesses. According to many surveys and research, almost all businesses of all sectors, especially small enterprises, faced the wrath of COVID-19 because of several issues such as supply chain disruption, reduction in sales, decrease in demand, and unavailability of raw material, among others.
The National Center for Biotechnology Information had surveyed the first impact of COVID-19 on small businesses in the United States. They have found that the active business owners plummeted by 22% in just the span of two months, February to April 2020.
In July 2020, Proceedings of the National Academy of Sciences (PNAS) of the United States of America presented their findings from a survey on the impact of COVID-19 on small enterprises in the United States. The result showed that 43% of small businesses went to temporarily shut down in just a few weeks into the pandemic.
It also stated that the majority of the small businesses were not ready to face such crises and survived for roughly two weeks on cash at hand. According to a survey by the World Bank, 26 % of businesses were non-operational during the pandemic.
The Era of Technology, Boosted by the Pandemic
Even though COVID-19 has frozen many businesses all over the world for quite some time, business owners are habitual in dealing with crises and coming up with solutions.
The study shows that the business community responded faster than expected to the crises and met the global challenge by utilizing the weapon of technology. Those business owners who adopted digital strategies at the right time have recovered their short-term losses and now looking forward to gaining good profits.
The adoption of technology and digital means of businesses had been growing very fast over the past decade but the pandemic has pushed this growth even more. During quarantine and lockdown, consumers moved towards digital platforms to meet their needs, and so did the business community to meet their demands.
This has caused an exponential acceleration towards digital adoption. According to a new McKinsey Global Survey, the leap of the adaption is roughly equal to a seven-year increase.
Long term Change
Even after the pandemic, the changes that occurred in the world have established their roots. The world has now entered into the digital era and Covid-19 was the accelerator.
The pandemic has changed our lives, our habits, and the business market. People have been spending more time on social media than they used to in the past. They are doing business meetings, discussing strategies, sharing business plans, and selling products through the means of digital communication. E-commerce has now taken over the customary brick-and-mortar business stores.
According to a report by UBS (Union Bank of Switzerland), roughly 80 thousand brick-and-mortar stores would close by 2025 due to the rise of e-commerce.
Adaption is a necessity
According to DataReportal, 376 million new users have been introduced since July 2019 and the numbers are growing every day with an average of 12 users per second. With this rate, it is not too long before the entire Earth’s population will be on social media for entertainment and business purposes.
Hence in this evolving era, it has become necessary to adapt to the change and utilize digital means of business to compete with the world. If we don’t accept the change and try to oppose it then it is only a matter of time before we find ourselves on the losing side against this evolving world.
As Albert Einstein once said,
We shall require a substantially new manner of thinking if mankind is to survive.
Conclusion
The entire World has faced many catastrophic consequences of the Covid-19 pandemic. But it has caused indelible harm to the small businesses, the backbone of the global economy. The outcome of the worldwide lockdown led the world economy to a global recession, and small businesses to the brink of destruction since the global supply chain was devastated.
Covid-19 has forced the entire world to move towards digital means of communication and business, which has accelerated the digital era by many years. Business communities all over the world adapted to the market change from brick-and-mortar business structure to e-commerce for sustainability.
For businesses to grow and be prosperous in today’s digital era, they must acquire the means of digital marketing.
