The COVID-19 situation and the government’s shutdown order has had a significant impact on small businesses over the last 6 weeks and the future is uncertain. The U.S. economy, with steady job growth and positive trends just a short 3 months ago, has come to a sudden halt. With federal predictions of 100,000 to 240,000 deaths from COVID-19 and unemployment threatening to reach levels as high as 32%, an economic recession appears to be inevitable.
The future impact of COVID-19 on small businesses may be unlike anything we’ve ever seen. However, there is considerable research being presented by business analysts and economists that offers some insight into what we can expect going forward. While predictions this early should be taken with a grain of salt, most experts agree that there is a likely “ballpark” in which the U.S. economy will find itself in the upcoming months.
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The Future Impact Of COVID-19 On Small Businesses: Expert Analysis
The most glaring question on many small-business owners’ minds is when business might resume to some level of normality, or even when we can expect a “new normal” to take a foothold on the economy, with a slow reopening.
Countries like China, who are at least a month or two ahead of the U.S. with their COVID-19 response, have been implementing successful measures to get their public health and economy back on track. However, their shutdown policies have stayed very stringent, and the U.S. must be cautious about implementing any relaxations to current policies. Making any premature move to reopen the economy could jeopardize its chance for long-term success.
It’s clear that a successful reopening of the U.S. economy for small businesses will hinge on the virus’ spread, the public health response, and the efficacy of government economic policy implementations. But after proposing many optimistic and pessimistic scenarios, a good majority of experts say that we’ll likely end up somewhere in the neighborhood of an average scenario. And while some believe that the future impact of COVID-19 on small businesses could be a just a small blip on the economic radar, it’s nowhere near guaranteed.
The Most Likely Scenario
The most likely COVID-19 scenario for the future of small businesses is one where the public health sector continues to place a high priority on sharp measures to contain the spread of COVID-19. In this view, we also need to see continuing appropriate economic policies from the government. Achieved together, the country can avoid a handful of possible “black swan,” i.e. disastrous, scenarios, but we are sure to have economic problems if government economic or public policies make any big mistakes.
If all goes well, the future impact of COVID-19 on small businesses could be less punishing than the 2008 recession overall. We may see a substantial decrease in new coronavirus cases in May and a cautious lifting of societal restrictions by June or July. And there is potential for another spike in cases around September when school starts again, but analysts predict a surge of new treatments for COVID-19 that will significantly impact the future of public health and likewise small businesses.
Certain industries will be slower to recover than others (restaurants, hotels, arts and entertainment, and airlines that rely on travel-related income), but 2021 looks like a potential rebound year. And while a definite economic downturn for 2020 is certain, there are high hopes for continued proactivity from the nation’s leadership and expectations for a COVID-19 vaccine in 2021 that will have a positive impact on the future of small businesses and the world at large.
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Small-Business Recovery
COVID-19 will surely have a tremendous impact on the future of small businesses. A harsh reality that many small businesses have to face at this point is that May will likely be a complete scratch. Our current trajectory suggests the beginning of a potential new normal in June or July, at the very earliest. But don’t take the news so badly, there are a number of ways you can start preparing your business for future success.
The arts and entertainment industries should plan on a rough rest of 2020, due to a 75% cancellation of all events through the end of the year. And retail can expect their struggles to continue, at least in the near future. Buyer behavior continues to change rapidly and the increase in jobless claims means fewer people with disposable income. But if you’re a business owner, there are ways to pivot, adapt and respond to the unpredictable, changing buyer demand.
More: [How To Generate Income Online During COVID-19]
How To Prepare The Economy For The Future
So, we can see how COVID-19 will impact small businesses in the future, but what about the economy as a whole? Again, it’s hard to say for sure, and unfortunately many factors are beyond our control. But of the factors within our control, testing will have the most significant effect on the economy’s resurgence. The more vigilant we are about testing in the U.S., the more knowledge we’ll have about where we stand. And that knowledge will help give us the confidence to loosen government restrictions safely.
We may have to take a good look at sacrificing some of our personal freedoms for the genuine necessity to keep our people safe if we want the future impact of COVID-19 to be positive for small businesses. China locked down completely and has implemented some very strict measures. They’ve had some success in eradicating the virus, but they’ll still have a big economic fallout and a GDP that finishes below last year.
So far, we haven’t been as strict in the U.S., and many experts worry that this will have a negative impact on the future of small businesses and the economy. Europe and the U.S. place a high value on personal liberty and freedom and a big part of China’s success has been the implementation of certain draconian measures that may never be implemented here, but should, in theory, to better deal with the virus.
More: [8 FREE Resources To Businesses Facing Coronavirus]
One Thing Is Certain: Change Is Coming
Even though most of the models predict at least an average-case scenario with some wiggle room for less-than-perfect government and public health policy execution, we can’t be totally certain what the economy will look like, say, a year from now. Some industries may never recover from COVID-19 and many will be forever changed.
The future impact of COVID-19 on small businesses and the economy will be that of a changed world; that much we do know. But the degree to which it changes will depend on what we’ve outlined here.
For your small business to be productive during this difficult time, focus on things you have control over. Use online tools to stay connected with your customers and keep up with meeting the changing consumer demand. Find creative ways to make a profit. Learn more about SBA small business assistance. And most of all, stay positive! We can hope to see a light emerging from the end of the tunnel soon, hopefully around June or July, but it all depends on how public health and government economic policy continues to respond to the rapidly changing situation.
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