Here at the Rules of Thumb blog from MoneyThumb, we do our best to stay positive while bringing helpful information to our readers. However, to realistically take a look at how Covid-19 has affected small businesses, we have to consider the true impact, which has been mostly negative. Today on our blog we will delve into the affect Covid-19 has had on small businesses and discuss the road to recovery.
The statistics are disheartening, to say the least. The National Bureau of Economic Research offers the following data concerning how small businesses have been affected by Covid-19:
"The number of active business owners in the United States plummeted by 3.3 million or 22 percent over the crucial two-month window from February to April 2020. The drop in active business owners was the largest on record, and losses to business activity were felt across nearly all industries. African-American businesses were hit especially hard experiencing a 41 percent drop in business activity. Latinx business owner activity fell by 32 percent, and Asian business owner activity dropped by 26 percent. Simulations indicate that industry compositions partly placed these groups at a higher risk of business activity losses. Immigrant business owners experienced substantial losses in business activity by 36 percent. Female business owners were also disproportionately affected (25 percent drop in business activity). Continuing the analysis in May and June, the number of active business owners remained low – down by 15 percent and 8 percent, respectively."
In this article from Business Insider, they list 5 charts that show how the fallout from Covid-19 has already financially dwarfed the Great Recession.
Of course, the numbers are not good and the conclusion is that for small businesses to recover from the losses sustained due to Covid-19 is going to take time and perseverance. But that's what we are made of, at our core. The will to overcome and our adaptability. It is a fact about the human spirit that hard times bring out the best in most of us.
In this article from CNBC, they shine a light on several small businesses that have found unique ways to survive and even begin to thrive again during these trying economic times. We have listed one of the examples below:
Retail and wholesale bakery Ovenly had to temporarily shutter its operations for seven weeks when the crisis hit, laying off its entire staff of 66 employees. Agatha Kulaga, co-founder, and CEO called it “survival mode.”
Since that time, the New-York based business has been slowly reopening its bakeshops and has rehired eight full-time and 18 part-time workers. Kulaga’s main focus now is staying as lean and as efficient as possible. “We have revamped our retail strategy to innovate in-store sales by including contactless transactions and to-go windows to address public safety concerns,” she said.
This strategy seems to be the overall theme for most small businesses, becoming leaner, and working smarter. If you are a small business owner who is struggling with a game plan to come back after Covid-19, we'd like to suggest you take advantage of this 40-page free workbook from Deloitte titled, COVID-19: Small Business Roadmap for Recovery & Beyond. The workbook from Deloitte is really awesome. They have created a framework tool to help your business through its recovery phase.
The truth is, we WILL recover from this virus, both financially and emotionally. In fact, many people have found the downtime life-altering in good ways. They have been able to spend more time with their families and have learned to appreciate what really matters.
The Rules of Thumb blog and the team at MoneyThumb would appreciate it if you could share this post on your social media page so that your peers who own small businesses can benefit from the contents.