Covid-19 and the impact on small businesses

The pain and uncertainty of the impact of the Coronavirus on small business owners is staggering and likely to be substantial. For small business owners the situation is an unmitigated disaster. In fact, it couldn’t be worse. No currency crisis, Gulf war, oil shortage, terrorist attack or banking collapse would come close to the impact this virus is having on our economy - but in particular on our SME sector. And, to think we spent three years preparing for the “enormous, incalculable impact” that would result from Britain’s exit from the EU — a breeze compared to this business wipe-out tsunami.

SME’s make up 99 per cent of the operational enterprises in Ireland and these account for 65 per cent of our employment base, consisting of over one million people.

If the past 20 years in business has taught me anything, it is that running a business is a very, very risky career choice and not for the faint hearted.

In 1998 in Dublin I got involved in the launch and development of a new internet portal business specific to the catering industry called CaterTrading.com In 2000 the ‘dot-com’ crash came and wiped out our ambition and plans along with so many others.

Thankfully we were small and had little exposure, but there were huge casualties back then, and the bigger they were the harder they fell.

A short eight years later in 2008 saw the arrival of the ‘Great Recession’. By then I was in business in Athlone, my printing business took four years until 2012 to properly recover — typical of most small businesses at the time. A very short seven years later Covid-19 arrived and the future is yet again uncertain for my business and every small business out there.

The cost of this crisis on every business owner is massive; at this stage it is incalculable. And, it goes well beyond financial cost, the toll this crisis is taking and will take on the mental wellbeing of so many business owners will only fully emerge in time, but it will be significant. Hit after hit after hit, it is understandable that some may no longer have the financial, mental or motivational will to open the doors again.

Talking to many business owners in recent weeks, we are all asking ourselves the same question, ‘why do we do it’ and ‘what happens next?’

There is no two ways about it, running a business is a very risky affair these days.

The costs are high, the regulations are onerous, the rewards are low and the workload is immense. Oh, and you can expect a major economic shock to emerge at least every eight to 10 years that will all but wipe you out.

The volatility experienced by small business owners over the past 20 years would not do much to inspire the next generation of entrepreneurs. I certainly would not want it for any of my four children.

The impact, financial and otherwise, of the coronavirus on small businesses will be huge. It will change the way we move, socialise, shop and do business, and it could even reverse the trend of globalisation.

What will happen next is the big question. Unfortunately for businesses and their owners, it’s still a matter of wait and see. This is not an easy or natural frame of mind to be in for those normally used to rushing around, shaking the bushes, doing deals, creating employment, taking calculated risks and making things happen. Right now nothing is happening.

Entrepreneurs will be forced to take drastic steps to continue operating and many are fearful about their futures. Those who do return will do so with much fewer staff, they will strip out costs, downsize where possible and try ride out the next year or two hoping that by then a new normality (what ever that means ) will have arrived.

One of the key challenges for small businesses is access to cash and small businesses are particularly vulnerable in this area. Overhead costs like rent, payroll, insurance, rates and utilities leave very little liquid cash for anything else — like owners taking a wage.

It must always be remembered that over the past few weeks, the virus has taken the lives of hundreds of Irish people. This is the most saddening thing and is heartbreaking for the families and loved ones of those taken by this deadly disease. This is a killer disease which has stopped our people and our economy in its tracks – nothing like it has ever been seen.

There are a number of things that need to happen to support the SME sector where businesses have experienced a 25 per cent (or more ) reduction in trade.

• A Working Capital grant needs to be provided for small businesses to enable them to open again when the restrictions are lifted. A grant and not a loan.

• Utilities need to introduce a reduced charges scheme for small businesses during and for up to six months after the crisis. Not a deferral, a reduction in charges.

• Lenders need to also give payment holidays to SME borrowers for potentially one year.

• Insurance companies need to honour their ‘business interruption’ clauses.

• Insurance companies also need to give premium discounts as appropriate for the period of closure.

• Commercial rates for SMEs need to be eliminated for one year.

• The Government needs to appoint a minister specifically for the SME sector to ensure that policies are targeted in the right areas.

• There needs to be an extension to the examinership protection window for Covid-19 impacted businesses.

• We need to ensure that as a state we are supported strongly by the EU in whatever measures the EU rolls out in the weeks and months ahead to support member states.

• Where redundancies are unavoidable the State needs to support businesses in making the relevant redundancy payments.

The SME sector is the backbone of the Irish economy, it is the main source of jobs and enterprises in Ireland. This reality needs to be recognised by the new government and meaningful, targeted support put in place very soon.

Aengus O’Rourke is a Westmeath county councillor and owner of Midland Print & Signs, Athlone.

 

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