The potential impact of COVID-19 on SMEs
Dr Joanna Berry explains why the impact of COVID-19 on small businesses could be detrimental, but there are ways we can help. Also, will there be a rise in the buying of luxury goods for some people?
We hear a lot about the airlines (going broke and asking for government support) the supermarkets (full of panic buying) the manufacturers (stepping up to agility and repurposing their factories to make the important things, like respirators and dialysis machines).
But for small businesses, medium sized enterprises, and sole traders, the impact of the coronavirus is potentially, and more immediately, devastating.
You cannot serve virtual coffee to a virtual customer.
You cannot clean virtual windows.
You cannot cut virtual hair.
But they still have to pay their staff, fill up their vans with petrol, and deal with VAT and business rates. Even a tax holiday only puts off the time they have to face these imbalances. Government loans announced over the last few days are most welcome but there is still huge uncertainty about how to access these.
I am a director of Acumen Community Buildings, and I spoke with the CEO Kate Welch yesterday about possible support for this social enterprise. Her response echoed this: “there is lots of help available but nobody knows where to get it from, or how, or what qualifying factors exist”. This has to change immediately.
Regional community support is, as always in the north of England, amazing. One only has to look on LinkedIn at the brilliant offers of support for SMEs, including that by the Institute of Directors’ Ammar Mirza CBE to assist SMEs with legal, hr and accounting help, for free.
Northern-based Facebook group ‘Help, I’ve Run Out of…’ has gone both national and viral overnight, from its genesis in my friend Natalie Loben’s bedroom yesterday morning.
My friends and I are encouraging others, those still able and keen to get out of the house whilst we can, to buy our cappuccino from a corner shop, and get our groceries from the local veg market. All while following the Government’s self-isolation or social distancing guidelines, of course.
All of these initiatives might just help some to stay in business a little longer. In the volatile and uncertain environment we live in, we can only plan ahead a day at a time.
But this isn’t always possible, or indeed ‘safe’ (in the new definition of that word – scrubbed and covered in antibacterial gel). Certainly, whilst I have a number of pals booking their summer 2021 holidays with great glee and at never-before-seen discounts (cruise, anyone?) I wouldn’t want to project that far ahead.
But there is no doubt in my mind, as I sit at home hosting asynchronous virtual seminars with students all over the globe, that I feel like I deserve a treat. Odd spending patterns have been noted in times of recession, especially the ‘lipstick effect’; a noted rise in cosmetic sales tied in women’s desire to find a mate in times of financial fragility.
I am not saying that the coronavirus has the same impact: the virus is no respecter of financial security from what I know!
But spending online does lend itself to ‘treat impulse’ and I am sure that we may find an uptick in such purchases. Life may be too uncertain to book your 2021 cabin cruise, but there is nothing stopping you buying some new music, perhaps summer clothes, maybe painting your toenails with a new colour, investing in some flip-flops to show them off as the sunshine starts to appear…
- Dr Berry referenced the below papers:
Boosting Beauty in an Economic Decline: Mating, Spending, and the Lipstick Effect. Hill, Sarah E.; Rodeheffer, Christopher D.; Griskevicius, Vladas ; Durante, Kristina ; White, Andrew Edward. Journal of Personality and Social Psychology, 2012, Vol.103(2), pp.275-291
Lipstick effect:First noted by journalists in 2001 Nelson, E. (2001, November26). Rising lipstick sales may mean pouting economy. The Wall Street Journal, p. B1.
- For more information on Dr Berry’s work, please click here.
- Take a look at the ‘Help, I’ve run out of…’ group, mentioned https://www.facebook.com/groups/218786766148290/