Coronavirus: How small businesses can reduce the economic impact of the pandemic

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The economic impact of the new coronavirus is expected to be significant for small and medium-sized businesses, if predictions of the disease spreading in Brazil are confirmed.

Although the scenario is still uncertain, experts recommend that businesspeople prepare for the problems they may potentially encounter ahead.

“Small and medium-sized business owners who are working with very tight cash flow, dependent on frequent revenue from their operations to balance their lives, will suffer greatly. There is a high possibility of an increase in the rate of default, bankruptcy, non-payment of salaries, renegotiation of commissions and the like,” says Roberto Kanter, MBA professor at Fundação Getulio Vargas.

This group is likely to be the most affected by the coronavirus, Kanter assesses. On the other hand, those who are working with a more comfortable cash flow should get through this time of crisis with greater ease, even better than large companies, which are more restricted in adapting to unexpected events than smaller businesses.

Some sectors have already felt the effects of indonesia telegram data coronavirus, such as those working in event planning and tourism. Companies in the transport, logistics and insurance sectors are also likely to suffer a significant impact, experts say.


“One of the things we imagine could happen is pressure to avoid crowds, which should have an impact on those who work in shows, events, cinemas and even restaurants, because there should be a reduction in demand,” says David Kallás, professor at Insper and consultant in strategy management at the consultancy KC&D.

In Italy, for example, retail is at a standstill and people are unable to travel. On the other hand, some sectors may feel a positive effect: delivery services - since people tend to avoid exposing themselves to risks by leaving home - and healthcare, such as pharmacies and related industries.

The FGV professor even advises that those who do not yet work with delivery services should consider starting to do so. “If you have a small restaurant and do not want to pay the delivery app fee, I recommend reevaluating, because it is better to sell something than nothing,” he says.

Kallás recommends that entrepreneurs, regardless of their industry, think in terms of possible scenarios, from the most pessimistic to the most optimistic, developing a strategy for each one.

“Since we are in a time of great uncertainty, it is not possible to make a prediction yet. We could end up like Italy, or no one will catch the disease. We don’t know. So try to draw two or three possible futures and anticipate the moves you can make, identifying the warning signs that would show that each scenario is coming true,” says the Insper professor.

Experts draw attention to some of the most sensitive areas, such as the supply chain and staff. The recommendation is that business owners start thinking about alternatives for supplying materials and ways to organize work remotely.

Regarding employees, Kallás also suggests thinking about a contingency plan in case someone on the team is diagnosed with the virus. Checking with the health plan about the procedures to be taken, defining ways to support the employee and protect the rest of the team are the priorities in this task.

The WHO (World Health Organization) and the Ministry of Health are some sources of information that can be used to plan these actions.

“We also have to think about the collective at this time, as citizens. This is a public health problem that needs to be managed. If everyone gets the disease at the same time, it would be the worst-case scenario. Let’s hope that the infection rate is minimally slow so that the system can stabilize. The role of small business owners is to slow this down, which is a social contribution,” says Kallás.

The Insper professor also advises preparing, if possible, a plan so that the service offered by the company has a virtual version - for example, distance learning in the case of schools or meetings via Skype for consultancies.

Due to the uncertainties surrounding the current scenario, Kanter advises that business owners should not make any new expenditures unless they are urgent. Companies that are heavily sales-oriented, on the other hand, may start to review their goals for the next quarter.

“Now is the time to look inside the company’s operations. Improve processes, avoid waste, and don’t spend money on things that aren’t necessary,” he recommends.

Companies are already starting to plan
At fintech Cora, which focuses on small businesses, 100% of employees were placed on home office as of Thursday (12). Igor Senra, CEO of the company, says that the decision was complex. “You don’t want to be the fool this time, create panic, do something that scares people, and tomorrow or the day after prove yourself wrong,” he says.

Despite this fear, the company sought to thoroughly study the available data on the pandemic. Observing that countries that have managed to control the spread of the disease have in common a rapid social isolation action, they decided to take the initiative and opted for this path.

The concern is not only with contact in the workplace, but mainly with the commute between home and work, often done by public transport - crowding that is conducive to contamination. In the businessman's view, the measure also derives from a notion of social commitment, relieving pressure on the transport and health systems that will potentially be overwhelmed by the virus.

Senra acknowledges, however, that the ease of adopting remote work is an advantage in his industry - everyone in the company already had a laptop and a home office structure, since the practice took place part-time at the company. “People with a street store who need a customer are in a more difficult situation,” he says.

The businessman is also working on the prospect of the virus’s impact on his business. This Friday (13), the team’s plan is to quantify this effect. “We are a digital account for small businesses. Of course, our customers will feel it, and a lot. And if they feel it, we feel it. It’s a cascade effect,” he says.