The pandemic sent shockwaves across the world with many SMEs bearing the brunt of the crisis due to the reduction in global demand for goods and services.
The worst effect of the pandemic on SMEs were the mass layoffs seen throughout all industries, although disproportionately. Disposable income that could have circulated in the economy became scarce, leaving many SMEs susceptible to permanent closure as people spend their money with greater caution. This was only a few weeks into the crisis, and prior to any government aid.
Business owners had very different predictions about the duration of the pandemic, leading them to make varied decisions on whether or not to keep their employees, cut their losses, or whether to save up or spend their stimulus checks. Many business owners were paying from their own pocket to stay afloat, and could not last more than a few weeks or few months, with layoffs.
A survey of more than 5,800 small businesses between March 28 and April 4, 2020 was conducted to determine how adaptable businesses were to the sudden change of the market and social landscape, and the impacts of the pandemic on SMEs.
According to the survey, 92% of SMEs changed at least one thing in their business model to adapt to COVID-19, most using some form of digital technology to bypass, adapt, or improve many traditional – potentially risky – ways of doing business.
Noting that some companies selected more than one option, the changes were listed as follows:
- 58% of businesses said that they had adopted a new online delivery channel
- 40% created new virtual services
- 36% listed the use of a new offline delivery channel, such as Uber Eats.
- 31% had released a new product.
- 19% new customers
Consequently, the survey also listed the 5 most commonly mentioned challenges that these businesses have experienced:
- 22% lack of employee skills
- 16% lack of adequate funds
- 14% setting up new online delivery channels
- 9% developing new products.
- 8% faced challenges adapting to the new health and safety standards