Keywords: Small Business; Impact; Challenges; Opportunities; COVID-19
Introduction
The COVID-19 started at the end of 2019, and it had taken a severe toll in early 2020 and became a global crisis. Once the World Health Organisation declared COVID-19 a pandemic on 11 of March 2020, the world readied itself for its wide-ranging and explosive impact. No industry was free from the hit of COVID-19. Everyone was stuck, and we had no choice but to accept what COVID-19 had in store for us. The unexpected orders from many governments worldwide to follow lockdowns and the movement control order (MCO) phases created anxiety and panic. The imposition of lockdowns prevented individuals from travelling cross-border and bringing the economy to a halt. COVID-19 spread rapidly, causing widespread concern among the public, which directly impacted many enterprises and organisational structures. The pandemic has transformed businesses and has been a massive challenge for many industries and organisations. For better or worse, COVID-19, has irrevocably altered our lives.
Small businesses are an essential element of many countries' economies across the world. However, small businesses are financially vulnerable and seem to be bearing the brunt of the crisis's economic effects (OECD, 2020). Small business owners have been struggling greatly and facing difficult times through the COVID-19 pandemic. However, there are also some opportunities to be gained by small businesses due to the pandemic COVID-19. With the "new normal" life imposed and social distancing procedures, the digital transformation has taken place. Business owners should embrace this digital transformation and adapt, specifically to change the way they do business to suit customers' needs.
The Challenges of COVID-19 on Small Businesses
The year 2020 was the most affected year, and 2021 is the year to slowly recover. The global response to the COVID-19 pandemic has been to embrace a "new normal" life. On the other hand, small businesses must develop other methods to tackle the difficulties of the "new normal" life to continue to exist. As COVID-19 disruptions have not affected all businesses equally in which some businesses could conduct employees to remote work, some businesses were unprepared. Some examples of the worst affected businesses are the ones involved in tourism, event services, education, childcare service, hotels, restaurants, arts and entertainment. However, this contrasts with businesses that deal with online platforms, transportation and IT-related. Depending on the nature and types of business, the challenges may differ from one enterprise to another. The challenges that small businesses may encounter are depicted in Figure 1.
Referring to Figure 1 above, the challenges small businesses face are drops in business activities, sales, income loss, temporarily closed businesses, reductions in demand, disruptions in the supply chain, and reduced active employment (EY, 2020). The main contributing reasons include governmentally mandated closures of factories, stores, companies, health concerns, reducing demands, and other economic factors (Fairlie, 2020). Many business closures may be permanent because of the inability to pay workers, expenses and debt obligations (SMECorp, 2021). Even with less stringent lockdown, customers still stay at home. For example, in Malaysia, starting on 20 August 2021, many non-essential businesses are re-opening again; however, not all shops are fully open because the ongoing concerns and worries are still there.
Are small businesses well-prepared for this unprecedented situation?
According to Irawan (2020), the "new normal" setting will influence business practice. The role of the owner of small businesses is to put more effort and devise a more efficient operation through information technology. Since COVID-19 has a negative influence on health, small company owners must prioritise safety. They must ensure their own safety, the safety of their families, and also their employees. As a result, when COVID-19 cases are rising, closing down enterprises appears to be the best option.
How can small businesses survive in the time of COVID-19?
The goal of running a business is to achieve profit by maintaining a high-income level and lowering costs. The COVID-19 attack, on the other hand, had caused problems for the business owners to keep their sales, what more their profits. These problems are more devastating for a new start-up company led by a young entrepreneur with little expertise and resources (EY, 2020).
The most crucial thing for small businesses is to survive, and their capacity to do so is determined by whether or not they have any business continuity strategy. In this unprecedented time and full of uncertainty, business owners must act fast and not wait for the action to be proper. Business owners must think about how to generate income. One option is to diversify into new types of business (services/products) that have demand or offer value-added service on top of the existing service. Other than that, business owners must ensure that documents are appropriately managed. These documentations are really helpful and indispensable, especially when applying for government incentives, grants or loans.
Cash planning is also vital in which cost-cutting measures are a priority (SMECorp, 2021). Business owners have to cut all the unnecessary expenses, for example, additional allowances such as claims, incentives, finance cost and entertainment expenses. Other than that, business owners also have to re-prioritise their business activities and cash flow and re-look at the wages or apply for wage subsidies (EY, 2020). The majority of small businesses have to conserve cash to reassess and set some priorities such as paying employees, rents, and other debt obligations (SMECorp, 2021). Due to the uncertainty on when the pandemic COVID-19 will end, business owners must ensure the cashflows can be rolled for at least six months (SMECorp, 2021). However, savings among small businesses are critical, and not many businesses can last more than three months; some can last for up to four months (depends on the type of business). In any circumstance, business owners have to try to get the business in shape again.
The Opportunities of COVID-19 for Small Businesses
Business model innovation
Amid this pandemic COVID-19, business owners must be willing to change by taking the first step and inspire the employees and customers to do the same (Agrawal, De Smet, Lacroix & Reich, 2020). They must exhibit creativity and innovation as a strategy to recover customers’ trust. Business owners must also be curious to delve into new domains and implement open ideas such as recognizing consumer needs and putting commercial factors into context (Agrawal et al, 2020). They must consider how the market changes while inventing their business model and its’ capacity to change. It is worth noting that small businesses have minimal financing, so the innovations carried out must be in line with the business objective (Khan & Arshad, 2019).
Virtual interface
Small business owners must be very optimistic and learn to deliver resources through virtual format. Since customers do not go to the shop to buy things nowadays, a virtual interface is an opportunity to seize. Online shopping channels have become the only venue for businesses and customers to communicate due to COVID-19 and the establishment of social distancing (Koch, Frommeyer & Schewe, 2020). Even though the pandemic COVID-19 have explicitly exposed business owners to unexpected conditions and the future, they should take the obstacles as a trigger to change. They have to be bold to experiment and explore new things. The sustainability of the business is essential; therefore, small business owners must use online or digital marketing such as Google ads, Facebook ads, Instagram ads, TikTok, or develop their own website. This is not only for the COVID-19 pandemic but consider this endeavour as an asset to the company and for long-term investment.
Social networking sites
Small businesses should engage with customers through social media as a platform for networking. According to Appel, Grewal, Hadi & Stephen (2020), social media is vital to increase business viability and improve customer-seller relationships. Nowadays, customers are more knowledgeable as they search for trusted sellers and know how to value their money. Therefore, business owners must seize this opportunity to gain the attention and trust of customers. They have to be consistent in posting and engaging with customers on social media. Also, social media allows them to interact with customers in a variety of ways. They can communicate with customers about new products/services; answer customer questions during the live session and utilise customers feedbacks to improve customers satisfaction. According to McKinsey Digital (2021), live streaming selling has helped China to become the world leader in e-commerce.
Conclusion
COVID-19 is a game-changer for digital transformation. The use of digital technology to ensure the long-term viability of small businesses is critical and cannot be overlooked. Accelerating digital transformation by strengthening digital infrastructure, boosting workers' Internet abilities, and encouraging them to use new technologies may help boost innovation (Nadkarni & Prügl, 2021). Small businesses should be encouraged to use digital technologies and e-commerce because tech-savvy businesses managed to stay relevant and competitive in the "new normal" (Babbar, 2021). The government must play a crucial role to expand digitalisation incentives to all interested businesses. With digitisation comes data, and with data comes the need for small businesses to develop a data-driven culture (Babbar, 2021). Online and digital channels are expected to continue to increase. In 2020, the use of no-touch payments, such as contactless cards and smartphone payments, grew among small companies (Kaveh, 2021). Remote work is here to stay and will increase even after the pandemic (Dickler, 2021).
