Covid-19 and Micro and Small businesses

COVID-19 IMPACTS ON MICRO AND SMALL BUSINESSES

By Vara Saripalli, Psy.D.

In UK small and medium size businesses, according to bank of England, contribute 45 percent of the total revenues, and employ 60 percent of the private sector employment. More importantly, small businesses represent a lifeline for millions of people whose income and earnings come directly or indirectly from such economic activity. This means that small businesses make huge contributions to our economy and employment.

However, because they are not legally required to present formal profit and loss accounts, small individual or family-owned micro business operate largely informal, hence lack proper business books and plans. They are usually run by family or relative members with limited management skills, experience, and knowledge, and because these businesses largely rely on personal or family earnings and savings, they and do not usually pursue external finances and investment options. Nevertheless, in addition to the over four million lives lost for reasons attributable to covid-19, there are huge economic and business shocks the pandemic has caused. The impacts can be varied from communities and localities, but most certainly have been severe for micro and small businesses owned and run by individuals from disadvantaged persons. Governments small business grants offered to self-employed individuals, micro and small businesses during the pandemic have substantially supported them and enabled them to continue paying vital costs for their operations. However, to some communities, there were structural challenges to access government grants while they needed them most, these complexities include, according to some businesses, the short termism nature of most of government interventions, while the goodwill and future certainties constitute an integral part of the any business survival strategy. The government introduced lockdowns and restrictions might have been lifted long time ago, and the pandemic might look over, but for communities, post-pandemic business environment continues to be tough to run or even to think of business idea. Particularly this period, when the Bank of England wans the economy to experience Country’s longest recession in about a century. A recession is usually characterized with a persistent decline in major economic activities, reduction in consumer demand and higher unemployment rates. Bank of England anticipates this general economic downturn to last at least years. This coupled by the months of total lock down and restrictions on people’s movements during the peak times of the pandemic, has dramatically dismantled already fragile businesses chains, disrupted traditional client systems and marketing structures particularly for self-employed individuals and micro and small business owners. These impacts though may vary in scope and durations from sector to sector, businesses, and individuals we spoke to told us that there is noticeable micro business closing their doors since the pandemic started. For those still running, they told us about a significant reduction in revenues and operations due to reasons related to covid-19. Pandemics do not just come and disappear, they usually come with huge uncertainties, which continues to be a major problem to most businesses even though the government has officially ended the lock down restrictions. Due to the sole proprietorship nature of most micro businesses, owners had the predicament that compelled them ot abandon their business plans or shift to a different sector, they know very little about. Though business mortality remains a largely under reported phenomenon, it’s a visible reality among immigrant minority communities. Service providers, delivery business, food retailers and transport service are areas that have seen most of shifts because of covid-19 according to people we spoke to. A. M a farther of four, is an entrepreneur in London’s islington borough has sold out his food retailer during pandemic. Abdi told MOJATU MEDIA that due to the souring running costs and uncertainties around the future of the food sector, he had to give up his business aspirations. He adds that because of the lockdowns, he had to go for other paid employments, which further left his business unsustainable.