Coronavirus: Impact on Small Businesses & Economy

We read and hear a lot about the impact of Coronavirus or Coivd-19 on Economy and the Stock Market.

However not everyone is aware of the fact that the contribution of the Small Businesses to the Global Economy is more than 50%.

The small businesses have a workforce of more than 70% means that the livelihoods of 70% people across the globe are dependent on these small businesses.

Even a small change in the "small businesses" cycle heavily disrupts the economy.

The CORONAVIRUS has heavily disrupted the CYCLE on which we all are dependent including our Families.

LETS TAKE A SIMPLE EXAMPLE TO UNDERSTAND THIS CYCLE:

1. You are the CUSTOMER who want to buy Groceries from a Local Supermarket or the Shop. Remember the money you spent is the earning of someone else.

2. That supermarket or the shop have hired at minimum 2-3 people including the owner himself. Furthermore there are at least 3-4 people (Parents, Kids, Wife) dependent on these 2-3 people who work in that Store or Shop. Thus the livelihood of these 10-12 people is completely dependent on HOW MUCH YOU SPENT OR BUY from that store or shop.

3. If less people buy or spend the money from that store or shop that means, Low revenue that means less profit that means stress on store or shop infrastructure, thus ultimately there will be a LOSS OF JOB (Layoff).

4. The cycle DO NOT STOP HERE. If there are Low revenues then the store or shop owner will ORDER less from the Factories. These factories employ more than 50 or 100 people who are feeding their families of 4-5 people. Thus low orders from the RETAIL market means low Production which in turn means less revenue and less profit that will eventually push for Layoffs or LOSS OF JOBS for many (200 -1000 people).

5. Furthermore, this cycle has one LAST LEG which is YOU. Consider you are WORKING in that factory which is making food items and these food items are to be sold at the retail store from where you are going to BUY. Thus if, for some reason, you stop buying or spend less that means you are among those who are getting laid off.

Thus in simple terms, YOU are the PRODUCER and also YOU are the CONSUMER too. Whenever there is a small Change in the PRODUCTION & CONSUMPTION cycle, it affects everyone including you.

CORONAVIRUS EFFECT IN REAL TIME:

The following points are just to tell you that what happens when you dont go out & must not be taken in any other sense because at the moment being healthy & obeying government & doctors guidelines is the only and the best option:

1. Because, as a customer, IF YOU DO NOT GO OUT, that means the Stores, Shops, Restaurents, Hospitality industry and everyone else will see less FOOTFALL that means Less Revenue , that means Less Profits and in turn the SHUTDOWN and the LOSS OF JOB

2. Because, if you do not go out and do not make any purchases of any kind, that means LOSS IN THE TAX REVENUE to the government from individuals and from the businesses. Which is why Governments across the globe are afraid & working hard to bring the cycle back into the action.

3. Because, if you do not go out, people are GETTING UNEMPLOYED, founders & owners are Force to CLOSE THE BUSINESSES

If you are a small business owner or a startup founder, you can get a consultation through the following consultation program "coronavirus: survival strategies for startups & small businesses"

Author:

Lakshman Singh

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