The impact of Covid-19 on small businesses
Bangladesh's GDP which was enjoying an exponential growth of 8.15 percent would be slowing down significantly due to Covid-19. According to the Economist Intelligence unit (EIU), the decline of GDP could lower down to 4 percent. The hardest hit would be the small business sector. This sector contributes 20.25 percent in our GDP growth and accounts for 35-40 percent of our employment. Hence the government and private sector has to take special steps for survival of small enterprises/businesses.
The continuation of pandemic beyond 4 months will force a majority of the small businesses to close down. This sector employs over 50 million people.
Global organisations have allocated US $50 billion to fight the pandemic. At least 1.5 billion could be procured for our country for small businesses.
In the post pandemic situation, the government has to formulate policies for revival of the small business enterprises. The stimulus injection declared by Prime Minister for small and medium enterprises has to be equitably distributed and ensure end use.
A cash transfer programme at minimum wage rate through mobile transfer could help the sector. If they focus on obtaining the stimulus declared by the government, which will be distributed by the banks, it will fund their business. Making prudent use of it, like keeping low inventory of materials and keeping ready stock could minimise their cost and keep them afloat.
Employees of small business are meagrely paid. On top of it cutting their salaries would push their survival. For the interim salaries could be reduced to an extent where they could survive. This would have to be determined by businesses. Because the employees also need to understand survival of the business is imperative for them to survive. In the post pandemic situation jobs will be even harder to get.
The small business owners need to especially look into how to minimise cost and make their staff more efficient. Multi-tasking needs to be made imperative for all employees. Resource allocation and ensuring utmost resource utilisation would be key to a successful revival and sustenance of their businesses.
Because of the instability of the nature of small businesses, employees will definitely have low morale in this crisis. Owners showing empathy towards their employees and counselling them could help. Small incentives in cash whenever the owners can afford could be given to the employees. This would make the employee feel taken care of and morale could be maintained. Where possible remote working should be allowed if not done previously.
Safety for employees can be ensured by spacing out the furniture, desk, tables and rotating the work schedule of the workers. The CDC and WHO have some guidelines regarding safety of staff that can be followed and applied according to the business' space and number of employees.
Employees while attending office should wear mask, gloves at all times. The restrooms should have ample hand washing materials, spacing out of work areas are mandatory. Besides if possible, employees can be given ride to and from work, so that they don't need to take public transport. This would relieve them from contracting the disease and further spreading the disease at the work place.
It's predicted 68 percent of small businesses will be closing down. Partial closing down would be a better option.
In the end, sustaining the small businesses will positively impact our economy and their closing down will send ripple effects to the wellbeing of the economy. Hence all parties of the financial system should safeguard the existence and security of the Small Businesses.
Acknowledgements:
The Business Standard
World Economic forum
Atlantic Council
Light Castle Partners