Harvard Business School

HBS: How Coronavirus Is Changing Small Business

Coronavirus is already negatively impacting business operations at nearly every level, with many small businesses struggling to scrape by.

That’s what Harvard Business School professors tracking the pandemic are finding, according to a report by The Harvard Crimson.

BIGGEST IMPACTS

Experts say the biggest impact will fall on small businesses, many of which are already experiencing large loss in revenue and depleting services.

“The biggest losers from the coronavirus [in business] are service industries that have seen their revenues dry up,” Willy C. Shih, the Robert and Jane Cizik Professor of Management Practice in Business Administration in the Technology and Operations Management Unit at HBS, says in a blog post. “Airlines, hotels, the travel industry at large, are losing revenue and cash flow that will be difficult to replace. Manufacturers can run overtime and make up for lost production and fill pent-up demand, but services demand is perishable and hard to replace.”

In fact, a new survey by the NFIB Research Center finds that among small businesses currently impacted by the Coronavirus, 39% are experiencing supply chain disruptions. Another 42% report slower sales and a 4% uptick in sick employees.

HBS professor Karen G. Mills tells the Crimson that small businesses play a critical role in the US economy and that “this part of the economy is under extreme duress because of the virus.”

She predicts that the average small business’s cash reserve will only be enough to last it for 27 days.

WIDER CONSEQUENCES

The head of the International Monetary Fund declared that the global economy is entering a recession and predicts it will last well into 2021.

Congress worked endlessly to pass a $2 trillion relief package, with $350 billion allocated to small business loans. Mills says time is of the essence

“If we can get this bill implemented quickly, then it could provide some relief,” Mills tells the Crimson.

Sources: Harvard Crimson, Harvard Business School, NFIB Research Center, ABC News

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