How Global Economic Meltdown Affects Small Scale Business PDF

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How Global Economic Meltdown Affects Small Scale Business

There is plethora of big, well-known businesses that are operating today that had once started as small businesses. Being able to start a business is not an easy task even if it is a simple business for example a dog walking business. An individual does not only need to be financially prepared but also needs to be psychologically prepared to handle the numerous challenges that may occur. A global economic meltdown is one of the biggest challenges a business must face because many of the sources that you need can be closed or be unable to help you. An economic meltdown is when the economy of a country experiences a downfall brought on by a financial crisis. Small business are the ones that have to face the most problems because they have a limited amount of support. Most small business keep their cash flow tightly controlled because they do not have resources that can provide them with large amounts of cash. During an economic collapse, customers may wait to make purchases or might delay their payments because they are waiting on receiving their own gross pay. Small businesses are also affected when one of their main clients who has a high impact on the brands revenue reduces their order. If a situation like that was to occur in a small business, the business would be affected in two ways. One way would be that there is a loss of demand. The client that purchased most of their products now is only purchasing a quarter of them. The second way would be the result of the loss in demand, the business owner could lose money by being unable to sell the services and goods to clients. When the business is suffering from these financial shortages, the business then needs to make a tough decision of laying off and reducing their staff. The result of reducing staff can become devasting towards the remaining staff because it can cause them to be overworked or dispirited. All these causes can lead a business to stop operating.

The coronavirus outbreak has impacted all businesses globally. The pandemic is not only affecting the health of the community, but it is also having a major impact on the economy. The National Federation of Independent Business (NFIB), had conducted three surveys in March when the COVID-19 outbreak was beginning to spread globally. The survey was conducted of about 300,000 small businesses. The graph to the left shows how small businesses responded on March 10th, March 20th, and March 30th. The graph shows that about 92% of small business owners were negatively impacted by the outbreak. Only 3% of small business owners had been positively impacted by the coronavirus in. Those businesses could be having rise in sales because the goods and services they are providing are high in demand. When the owners were asked how concerned they were regarding the pandemic affecting their business 72% were high concerned. Because they believed that if they did not receive the proper support from the government, they would need to close their businesses. And that would leave all their workers unemployed. In the beginning of April when U.S had to undergo the lockdown mode all businesses whether large or small were closed. They were not allowed to open because that would be going against the rules and they would need to pay a hefty fine. During that time so many inquiries

were going to the unemployment websites that it caused the websites to crash. According to an article publishes on Seattle times, Washington state’s unemployment website was one of the first websites amongst all the other states to crash due to the rise in claims the state was receiving. Since the site was continuously crashing small business owners, unemployed workers and other individuals were unable to receive their unemployment benefits which caused a lot of havoc. Small business owners were having a tough time reaching out to banks and financial advisors because those groups were receiving so many calls at the same time. But once they were able to get in touch with the banks, they were able to receive the support that was needed.

Many small businesses during the pandemic were able to receive loans from their state government. The New York Times, published an article, letting the public know how loans and funds are being distributed by state to small business owners. The map above shows the value of loans that are provided to small business employees by the state government. The loans that state government had provided allowed businesses to pay their employees for a three- month period.

When there is a global economic meltdown, small businesses are affected by it in many ways. Most of the times after a collapse the businesses has a hard time recovering from all the losses that have impacted their brand. The most recent example of an economic meltdown would be the COVID pandemic. Even though businesses are beginning to re-open now, getting the same amount of traffic and being able to build the same revenue as they had before the outbreak will still be a challenge for them.

References.

COVID-19 Impact on Small Business: Part 3. 10 Apr. 2020, www.nfib.com/content/pressrelease/economy/covid-19-impact-on-small-business-part-3/. Mapes, Lynda V. Washington State Unemployment Website Crashes after 'a Tsunami of Claims' for Coronavirus Job-Loss Benefits. 20 Apr. 2020, www.seattletimes.com/seattlenews/state-website-crashes-after-seeing-a-tsunami-of-claims-for-new-coronavirusunemployment-benefits/. Russell, Karl, and Stacy Cowley. Where the Small-Business Relief Loans Have Gone. 7 May 2020, www.nytimes.com/interactive/2020/05/07/business/small-business-loanscoronavirus.html....