The Coronavirus Crisis: What Economic Impact Will COVID-19 Have on Small Businesses?

May 20, 2020

An estimated 7.5 million small businesses in the U.S. could close permanently as the result of the Coronavirus. Social distancing measures and considerations of what is and is not essential…

An estimated 7.5 million small businesses in the U.S. could close permanently as the result of the Coronavirus. Social distancing measures and considerations of what is and is not essential have had a major impact. Many businesses have had to shut down their brick and mortar locations.

Converting to an entirely online business in a matter of weeks has put a lot of strain on many entrepreneurs. Some cities and states are beginning to reopen. However, staying compliant with Coronavirus regulations is presenting new challenges.

Fortunately, there are resources available to small business owners. Small business lawyers are doing what they can to help in this time of chaos and confusion.

The team at Grellas Shah LLP is here to serve small businesses in the Bay Area and the wider community. Read on to find out more about what economic impacts to expect and what you can do to keep your small business afloat.

How Could the Coronavirus Impact Your Small Business?

There are a number of ways that Coronavirus could have an economic impact on your small business. This impact could be especially significant if e-commerce was never your focus. Let’s break down some of the biggest ways that Coronavirus could change the way you run your business and lead to economic loss.

Transitioning to E-Commerce

Many small businesses, especially those that have opened within the last year, did not establish a strong online presence prior to the pandemic. That means that they relied almost entirely on their brick and mortar locations to maintain financial stability.

Transitioning to e-commerce is costly both in money and time. Without a web developer or designer on the team, you may have to work with contractors. Once your site is up and running, you will find yourself competing with e-commerce giants, like Amazon. These major retailers have enough money to offer major incentives, such as free shipping and low prices.

Losing Sales: No Foot Traffic and Less Disposable Income

In the time it takes to get your e-commerce site developed and come up with a plan for fulfilling orders, you are losing days’ worth of sales.

Even in states that are allowing nonessential businesses to reopen their brick and mortar locations, small business owners must find ways to meet CDC guidelines.

This process often entails limiting the number of patrons who can enter your shop or requiring patrons to don facemasks. This reality could lower the number of sales made in a day as people are required to wait or turned away.

External factors may also lead to the loss of sales. A recent survey found that 1 in 4 Americans have lost their jobs or taken a pay cut since the outbreak began in February.

In other words, a quarter of the country has lost its disposable income. Niche or nonessential businesses are going to feel the brunt of this economic downturn.

Cutting Back on Spending and Pay

Perhaps one of the most heartbreaking decisions small business owners have had to make is whether or not they can afford to keep their staff on the payroll. Many have less revenue coming in and profits going towards different expenditures, such as web development and monthly rent. There simply is not enough to maintain employee pay.

Losing employees during the pandemic can have long-lasting effects on the business. With a smaller workforce, it may become difficult to fulfill orders and reopen stores in a smooth, timely manner. Hiring new employees in the future comes with the cost and time consumption of scouting and training.

Many small business owners recognize that coming back from the Coronavirus is not going to be easy and for some, it may seem nearly impossible.

What Can You Do to Protect Your Small Business During the Pandemic?

As bleak as this sounds, all hope is not lost. You will need to have savvy and perseverance and make some upfront investments. In doing so, you can ensure that your small business will survive the pandemic.

Stay Compliant

Federal, state, and local regulations will all have an impact on when businesses can reopen and what they must do in order to stay open. Naturally, many small business owners are itching to open their doors, but patience and safety are key.

To give an example of what compliance may look like, let’s look to the state of California, which is entering Stage 2. Stage 2 involves curbside pickup for low-risk retail businesses who have completed the necessary risk assessment and site-specific protection plan.

Whether or not you have entered Stage 2 will depend on the county your business resides in and the rate at which the virus continues to spread. These regulations can change at any time and it is important that you stay on top of them or risk being asked to close your doors once again.

Apply for Stimulus Support

The recent CARES Act provides $2 trillion in federal aid for citizens, corporations, and small businesses. It is possible to receive a federal loan that will support your business through these on-going changes and losses. For many small businesses, loans are the only way that they can continue to run for the next few months under the current circumstances.

Find Legal Assistance

Staying compliant with constantly changing regulations and navigating the stimulus loan application process is not easy. Unfortunately, many small businesses have struggled with both.

Working with a small business lawyer versed in Coronavirus regulations and loans can alleviate these pressures, allowing you to focus on your services, customers, and employees.

Where to Find a Small Business Lawyer in the Bay Area

If you are searching for a small business lawyer to navigate your Bay Area business through the Coronavirus, you have come to the right place.

Contact Grellas Shah LLP and we will ensure that your small business is compliant with Coronavirus regulations and that you receive the stimulus support you deserve.