Today, the coronavirus epidemic numbers are relatively small in the U.S.: according to the Johns Hopkins Coronavirus Resource Center, there were 2,174 confirmed cases in the U.S. on March 14, 2020. But that figure could start rising as more people get infected. The attending physician of Congress and the U.S. Supreme Court says that he expects 70 million to 150 million Americans to become infected by the coronavirus.
What does that mean for small businesses?
Many of them could see a drop in revenue as people start staying away from shopping malls and restaurants. Employees could fall sick. Business owners could face a double whammy: they could have to pay for sick time and hire temporary workers, as well.
In fact, rising employee costs and falling sales are only some of the problems on the horizon for entrepreneurs. And there could be many others.
How will small businesses cope with the coronavirus?
Which industries will be affected the most?
We’ve identified five sectors that could face the most significant impact. Here’s what our research has found. We’ve also collected information on the best ways to endure this crisis.
Types of small businesses that will feel the coronavirus impact the most
People are staying away from restaurants and coffee shops. Seattle, regarded as the epicenter of the U.S. coronavirus crisis, has been hit particularly hard. Some restaurants have seen a 50-70% drop in business.
But the fall in customers isn’t limited to any one place. In New York, bars and restaurants need to cut down the number of customers by half.
Governor Andrew M. Cuomo has issued a directive that there should be more room between tables, which will reduce the risk of infection in small businesses.
Here are some more ideas about how restaurant owners could handle the crisis they are facing:
- Register with a food delivery app.
- You could check the temperature of diners before they come in, and offer them some disinfectant gel.
- Offer free vitamin supplements and increase surface-cleaning efforts.
- Provide customers with a grab-and-go option.
- You could also offer to sell your food inventory to help counteract the low supply of food in supermarkets.
Event management companies and their contractors
The event planning business is a $325 billion industry. But it’s currently facing a significant setback. Customers are postponing events in droves, and they aren’t sure about the rescheduled dates. Even worse, many events are just getting plain canceled. This hurts small businesses in the events industry.
The issue is not exclusive to event management firms. There’s also a downstream effect that hits the freelancers and contractors that the event managers hire: they find themselves without work. The list of people affected includes disc jockeys, catering firms, and photographers.
When will things get better?
That’s anybody’s guess, but hopefully soon.
In the meantime, here’s what event managers can do:
- Try and switch over to a virtual conference. Of course, this won’t work for every type of event, but there are many where the change is possible.
- Familiarize yourself with insurance-related issues connected with the coronavirus. Here are some useful resources: Insurance for events canceled by the coronavirus, what you need to know about canceling an event, and if event cancellation insurance will cover the coronavirus.
- If you are going ahead with an event, study the interim guidance issued by the Centers for Disease Control and Prevention. This will tell you the steps you can take to make your event safe and how to deal with an emergency if one arises.
Auto repair establishments
There are about 229,000 auto repair and maintenance centers in the United States. Although the spread of coronavirus hasn’t hurt them, that could change soon.
China is a big producer of auto parts. The items they ship to the U.S. include tires, suspension components, and windshield wipers. A significant proportion of the parts required for collision repair work comes from China.
The production of auto parts in China has plummeted as its factories have closed down. Consequently, exports of these parts to the U.S. have fallen.
The Auto Care Association, which is a trade group that represents the interests of 150,000 auto aftermarket and service businesses, monitors this matter carefully. Here’s what Stacey Miller, their senior director of communications, has to say:
“By mid-March, the shortage of supplies will be felt, and members are projecting they’ll experience disruption through May or June.”
What can these small businesses do?
- One step they could take is to build up an inventory of the parts they need. Instead of maintaining a minimal level of stock, they could think of purchasing pieces that would last them for six months or more.
- If you need cash to buy inventory, a small business loan could be the best solution.
Companies that rely on imported Chinese goods
Auto care establishments aren’t the only ones that will be affected by a shortage of imported goods. The globalization of the supply chain makes many small businesses in the United States vulnerable.
The Center for American Progress, an independent policy institute, points out that supply chain disruptions will start in mid-March. These will force “thousands of companies to throttle down or temporarily shut assembly and manufacturing plants in the U.S.”
- Try finding substitutes to your products, while this could mean having to buy more expensive alternatives, you could adjust your prices while the crisis lasts.
Malls and stores
A recent survey by Coresight Research confirms what most of us know already. People are increasingly staying away from malls and stores.
How long will it be before the situation normalizes?
It’s difficult to say, but the problem will likely become worse before it gets better.
Here’s what the Coresight Research survey found:
27.5% of the U.S. respondents said that they were avoiding public areas.
Another 58% said they would start staying away if the coronavirus outbreak worsens.
Of the 27.5% of people who have already made changes in their habits, 40% say that they are avoiding shopping centers as far as possible.
What can you do if you run a retail store? Is there any way to replace the business that you could lose because of the coronavirus scare? There are two specific areas that you could target.
- One, cut costs as far as you can and implement other low season survival strategies.
- The other step you could take is to switch to an online sales model. The coronavirus crisis could be the perfect time to start focusing on e-commerce.
The bottom line
COVID-19 will likely have a deep and lasting impact on American society and its small businesses. Let’s hope that the crisis is over soon and things get back to normal. In the meantime, company owners should think deeply about how they can change their operational practices to minimize the negative impact that the coronavirus outbreak is causing.
The U.S. government has taken preemptive steps by saying that it will provide $50 billion in low-interest loans to companies that are affected by the coronavirus pandemic. The loans —guaranteed by the U.S. Small Business Administration (SBA)— will be limited to $2 million for each company.
What are you permitted to do with the SBA loan? According to the SBA, businesses can use the funds to:
- Repay debts.
- Meet payroll expenses.
- Pay accounts payable or other bills that the company doesn’t have cash for because of the coronavirus outbreak.
The requirements to get this loan will, though, will most likely be very stringent.
At Camino Financial, our motto is what inspires us, “No business left behind.” That’s why we endeavor to provide small business owners with the information and resources they need to run their companies efficiently and profitably, even in times of crisis.
Our business loans are available for sums up to $400,000, and we can provide funds within 2 days of approval. Apply now to see if you prequalify.