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The Impact of COVID-19 on Small Business

Summary

The following paper provides a thorough study and report on the current business situation that was heavily influenced by the coronavirus pandemic in 2020. First of all, the researcher presents an issue while talking about it became extremely difficult for small businesses to grow further due to many restrictions that were imposed by the government. The next paragraph presents consequences that were faced by businesses. The negative outcomes included the drop in consumer demand in such industries, as catering, tourism and a shortage of workers. Another essential factor that demonstrates the Covid-19 impact is the changes in crude oil prices. The paragraph about oil industry also includes a graph that displays time series of prices, according to which it becomes evident that this business also faces adverse outcomes. In addition, the paper provides a paragraph about initiatives that were implemented by the government in order to financially support companies. The report ends with the conclusion that despite all measures, business in several sectors is still in crisis.

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Introduction

Recent years have been characterized by the rapid development of small business on the global scale. In addition, in many developed countries small companies increased their share in the economy, which has a positive effect on the overall financial development. In America, small business has significant potential for further growth because of flexible market condition, which creates a number of opportunities. Nevertheless, the coronavirus pandemic in 2020 forced a decline in the number of active small companies. This fact indicates that even while receiving considerable funds from the budget, business still faces a number of important problems. Recent restrictions have created even more pressure for companies and many of them are deprived of opportunities to effectively use public financial investments. While the government is taking action to against the virus, business owners are rapidly adapting to the changing needs of their employees, consumers and suppliers. In addition, they also have to constantly address their financial and operational challenges. For this reason, it would be safe to assume that the impact of coronavirus can be considered as one of the main business issues of 2020.

The Influence of the Pandemic

The new virus has pushed the global economy to the brink of a crisis. COVID-19 is pushing companies to rapidly change the way they operate while also testing the sustainability of different systems. Currently business owners are faced with a range of new system priorities and challenges, including sudden restrictions, policy changes, shortage, safety threats, reducing of benefits. Therefore, managers and executives should act extremely quickly to address urgent issues.

Due to pressures from the COVID-19 pandemic, business processes in most industries became severely disrupted. For many multinational companies, which are managed on a global scale, complex core procedures need to be redefined and redesigned. The reason for this is that many countries closed their borders and travelling is heavily restricted. Organizations try to respond swiftly and change their policies in order to ensure that the business runs smoothly even in such conditions. Despite the fact that the first wave of coronavirus is already over, some companies still face the consequences. The current crisis has influenced the entire economy, including production, services and demand. While the government has taken different measures to help businesses stay afloat, it will take several year to recover completely.

Consumer Demand

From a business point of view, the main consequence of the coronavirus pandemic is that there has been a sharp drop in purchasing activity. Medium-sized entrepreneurs in such economy sectors as tourism and catering have faced a significant outflow of benefits and the number of clients. Researchers confirm that fact by stating that such firms as “restaurants, tourism, and personal services project that they will find it extremely difficult to stay in business if the crisis lasts longer” (Bartik et al. 17666). The sudden drop of consumer demand has forced many companies to go bankrupt. The reason for this is that it takes an immense amount of support and new policies in order reorient a team to a new direction. Sometimes the changes are so significant that it seems as the business is started from scratch.

Another common problem for business owners in different segments of the consumer market is the shortage of working staff. As some business industries, such as tourism and catering, become irrelevant and lose employees, retail and delivery companies attract new workers. However, even despite the changing structure of demand in the labor market, it is doubtful that they will be able to save the American labor market from the loss of millions of jobs. For this reason, not only businessmen expect financial support from the state, which can be provided in several formats.

Crude Oil Price

Another important sector that indicates the economy growth is the oil and gas industry. Therefore, it would be reasonable to analyze the changes in the crude oil prices in order to explore the impact of coronavirus on business. The following graph demonstrates how crude oil prices changes from January to March. Researchers note that “with the increase of COVID-19 cases rising in February, COVID-19 sparked a downward trend of crude oil price” (Oyewola et al. 107). It means that this business sector was influenced in a negative way by the pandemic.

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Time Series of Crude Oil Price and Covid Cases
Fig. 1. Time Series of Crude Oil Price and Covid-19 Cases (Oyewola et al. 107)

Measures

Nevertheless, ever since the emergence of the virus the government introduced several measures that were able to ease the burden on business because of a sharp drop in demand. While restrictions are tightened, companies still receive support so that they could focus on getting through this difficult period without being distracted by other critical moments. For instance, in October businesses in the hospitality, accommodation and leisure sector obtained “cash grants of up to £2,100 per month” (Ruth 1). The rationale behind this decision is that these industries are the most negatively impacted by the pandemic and quarantine limitations. Moreover, the US Senate constantly tries to help small business to access financial help with different policies and programs and provides hundreds of millions for them.

Conclusion

In conclusion, it would appear that during this year it became extremely difficult for businesses to stay afloat. Recent changes and policies have negatively impacted many processes, significantly reduced consumer demand and even influenced oil and gas business. Nevertheless, prompt measures managed to reduce the scale of the problem and thereby mitigate the subsequent economic crisis. The government provides substantial financial support in order to help small companies not to go bankrupt. Nevertheless, it is evident that the most effective method to help organizations would be stopping the spread of the virus. In this way, it would be possible for businesses in struggling sectors to continue working.

Works Cited

Bartik, Alexander W., et al. “The impact of COVID-19 on small business outcomes and expectations.” Proceedings of the National Academy of Sciences, no. 117, vol. 302020, 2020: pp. 17656-17666.

Oyewola, David O., and Akomolafe Femi Augustine. “Predicting Impact of COVID-19 on Crude Oil Price Image with Directed Acyclic Graph Deep Convolution Neural Network.” Journal of Robotics and Control (JRC), no. 2. vol. 2, 2020: pp. 103-109.

Lea, Ruth. “Coronavirus crisis: more Government support as restrictions are tightened.” Arbuthnot Banking Group 26 (2020).

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StudyCorgi. (2022, July 31). The Impact of COVID-19 on Small Business. Retrieved from https://studycorgi.com/the-impact-of-covid-19-on-small-business/

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StudyCorgi. 2022. "The Impact of COVID-19 on Small Business." July 31, 2022. https://studycorgi.com/the-impact-of-covid-19-on-small-business/.

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StudyCorgi. (2022) 'The Impact of COVID-19 on Small Business'. 31 July.

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