The Impact of COVID-19 on Small Business: Outcomes and Expectations

Running a small business always involves a degree of uncertainty. In these difficult times, however, the risk is even greater. As we are well into the pandemic already, early results are showing and things are definitely not looking optimistic. However, not every area and not every industry is equally at risk. With that in mind, and without further ado, here are some things you need to know about the impact of COVID-19 on small businesses, as well as the outcomes and expectations of the phenomena currently taking place.

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Small businesses are financially vulnerable

Even without the global pandemic and the changes in customer behavior patterns that it brings, it’s important to note that small businesses are quite vulnerable to begin with. First, you have employee turnover. Then you have financial and time management issues that the majority of first-time entrepreneurs are ill-equipped to deal with. Aside from that, you also have the problem of marketing costs and access to new technology, which is an area where some of these small businesses tend to lag behind. Now add the COVID-19 pandemics and what you will see is a disaster.

mass layoffs and closures

While some people fear the potential economic fallout from COVID-19, it’s important to note that some of that impact is already visible. Mass layoffs and closures are already here. To somewhat minimize this impact, governments and government agencies around the world are doing their best to remedy the situation. However, we will have to wait and see what positive effect this can have.

Types of businesses at risk

When it comes to examining the pattern of which companies fail and which thrive, it’s important to note that not all industries have been impacted to the same extent. For example, while accommodation and food services (mainly the hospitality industry) have been fairly affected, they are quite resilient. This is because they can easily switch to a door-to-door delivery service. Arts, entertainment and recreation, on the other hand, and educational services fare the worst. Even they are trying to adapt by going online, but that has met with limited success so far.

Financial provision

While carefully examining this list, some might assume that why some businesses fail while others thrive is entirely coincidental, while nothing could be further from the truth. Companies that have made the necessary financial arrangements and have a stronger foundation are the ones that will make it. One tip that might help with this is for all entrepreneurs out there to focus on what they do best, which is mainly small administrative tasks and networking. That being said, things like human resources and finance should be left to professionals. Finding and hiring a personal accountant can prove life-saving during these trying times.

Vulnerable sectors employ so many people

The problem is probably even bigger than you think. According to some of the latest statistics, these considered vulnerable sectors are much more important than originally thought. In the USA alone, they employ around 20 million people and are responsible for up to 12 percent of total sales in the USA. In other words, any disruption here will have a major impact on life in the US in the years to come.

Essential vs. non-essential

Earlier we mentioned that some types of businesses are more at risk than others. For example, the food industry seems to be pretty safe, while the apparel and fashion industries are not doing so well at the moment. Why is that? Well, the main reason is the fact that some of these are considered essential while others were not. It’s not just that the average purchasing power of consumers is falling, but also that people don’t know how far it can fall. So they are less prone to impulse buying and tend to hold on to their hard-earned cash as much as possible. Also, companies that are more willing to improve themselves tend to be more resilient.

Geographical location also plays a role

Another thing worth noting is the fact that some areas are simply more exposed than others. First of all, this depends on the possible outbreak of COVID-19, since not all measures are nationwide. Some smaller countries have opted for full lockdown as a safety measure, but the correlation between the number of cases in certain areas and the local economy is more than obvious. Also, as we mentioned earlier, some industries are more at risk. Well, there are some areas that specialize in just these industries. This adds another risk factor to the mix.


While the majority of people live in the present and worry about the day-to-day consequences of this pandemic, the phenomenon may have long-term implications for the business world. By some estimates, a quarter of small businesses could shut down permanently, with a devastating effect on both the global and local economies. Sure, the global economy is bound to recover (it has recovered after every single disaster), but that seems too far in the future for some. It’s also quite clear that the small businesses that are able to adapt have the best chance of making it.