From a business perspective, the main issue is not just the number of cases of coronavirus, but how much it has disrupted the economy. Social distancing, such as that imposed by China, has been implemented in some hotspots, but these measures could cause panic and negatively impact the global economy.
Fears of the Covid19 impact on the global economy have shaken markets worldwide, dropping stock and bond prices. Small businesses in America are already impacted by the financial crunch from coronavirus that has millions of customers taking refuge from the pandemic by avoiding unnecessary movement and shopping trips.
One analyst predicted that the negative effect for businesses from Covid19 could lead to 15,000 permanent retail shop closures in 2020, and the Economic Policy Institute predicted that three million people could lose their jobs in the U.S. before the summer.
Some U.S. states have already started mandating that non-essential businesses — pretty much anything except supermarkets and pharmacies — should stop working. But, even in states where they haven’t been closed, small businesses have already decided to do so, or at least reduce their working hours dramatically.
The effect on the economy includes supply chain backups, stock market drops, and cancellations of meetings and business trips. For small businesses, however, there could be long-term effects on daily work life.
Policymakers in other countries have already applied measures to help small businesses during the pandemic. China has helped small and medium-sized businesses to postpone some payments and get lower interest on loans and rents. Italy has gathered several billion dollars in aid, including credits for companies and tax cuts.
In the United States, the funding package for affected populations will include a small-business loan program, which is typically offered to businesses experiencing natural disasters. Some policymakers have also asked for legislation to offer compensation to employees who need sick leave.
Small businesses are in the focus of this crisis because the impact on consumer behavior can really impact their survival. The Centers for Disease Control and Prevention has asked businesses to require sick workers to stay home, have sick leave policies that punish workers or demand a doctor’s note, and require employees to inform them if any of their family members are sick. It also asked that businesses prepare for multiple workers to stay home in cases such as caring for their children.
If the recession continues for too long or becomes worse, many firms could go out of business. Bigger companies typically have more resources, and some businesses may not be affected at all. But for smaller businesses, it could be devastating. Reliable information that isn’t panic-driven is very helpful since global platforms amplify the fear with misinformation. Such fear will further hurt citizens’ psychological state and lower trust in governments’ abilities to help and protect them, which will increase the likelihood of socially damaging behaviors, such as panic-buying.
If you need help maintaining and growing your business in time of crisis, feel free to contact us!