The Impact of COVID-19 on Businesses


Kara McGuinness, Student Contributor

We are in the midst of a public health crisis that is causing massive economic disruption. COVID-19 has disrupted the everyday lives of people all around the world. However business owners are some of the strongest in feeling this economic blow. With stores, offices, and most businesses in the US and around the world having to close down for a period of months they are facing a huge revenue loss. This however is not the case for all businesses, some businesses are actually profiting highly from this pandemic, either by offering online services, such as zoom or amazon, or supplying essential health products such as sanitizer. It is important to note that no matter how good or bad businesses have done during COVID-19, there is no doubt that there will be changes to come in the future of these businesses, all businesses will have to adjust to a “new normal” once the virus has begun to phase out. 

One of the biggest and most obvious impacts that COVID-19 has had on the business environment is the limiting or stopping of company and client interaction. With stay at home orders and business closure it makes it impossible, or nearly so, for companies to have direct interaction with their consumer base. A survey from 451 research on 751 businesses reported that 81% of these businesses would experience reduced access to clients or prospects due to COVID-19 in either the short term or long term. This rise in contact free business models poses a stunt in company market growth and the overall expansion and revenue of businesses. Small mom and pop type businesses are also feeling an extreme hit from the closures, with their main or sole source of income coming directly from their small business a few months of inactivity can be catastrophic for the businesses survival. It is known that new/small businesses typically succeed or fail within the 1st 2 years of operation, with this inactivity period it makes it difficult for businesses to be able to support their starting investments and avoid a major deficit. The business I work for falls within this 2 year range and has faced revenue loss of over a hundred fifty thousand dollars in April alone. The inability of businesses to shift online efficiently and effectively puts them at a major disadvantage to other businesses with such resources, or for some companies, such as thrift stores like the one I work for, their main revenue or inventory comes directly from person to person transactions. This major loss of profit and unemployment is leading many to fear a record breaking economic and employment crisis a few years down the line. 

On the note of remote based business, companies such as Amazon, Netflix, and zoom have all seen substantial increases in customer numbers and profit. These companies are able to capitalize on the inability of people to leave home and their increased demand for delivery products and at home entertainment. Many news sources, such as USA Today, have reported that the drastic increase in profit for amazon is likely to make Jeff Bezos the world’s first trillionaire by the year 2026. Other digital companies are standing to see accelerated profit margins as well, such as netflix. Netflix is able to increase its customer base due to the ceased production of currently running TV shows for the foreseeable future and the cancellation of current live sports seasons. With the streaming company facing increased competition, currently and pre-pandemic, from new and lasting streaming services such as Hulu and Disney+ the global stay at home orders have been a saving grace for them to retain current customers as well as gain new ones. These already billion dollar companies are only seeing gains while so many other businesses are facing detrimental losses, a topic of controversy amongst many Americans, but a pillar of success for these companies themselves granting them the ability to help stimulate a struggling economy. 

All businesses will have to adjust to their own version of “the new normal” in the time to come, this is likely to include more contact-fee automated models for businesses, the emergence of many entrepreneurs as people begin to struggle in the job market, government regulated business, and many other changes to the future of companies. The coronavirus has accelerated the use and need for robotic based models in the workplace, a field that was expected to take over many aspects of the business world in the coming future. Will no contact becoming a version of the new normal automation has been used to replace many former human jobs, this change is likely to last in many sectors of the workforce, therefore depleting certain areas of the job market and stimulating computer science based areas. In order for businesses to grow soon they will need to develop at least some use of the advanced technology that is becoming part of “the new normal”. The new normal for business will also mean some increased competition a few years down the line as entrepreneurial ventures saturate the business scene. With many people fearing a future of unemployment or seeing this time as optimal to escape a job they were tired of, many will turn to being self employed and launching their own business ventures. This course of action offers them some hope in employment and being able to control their own source of income. As for already established businesses, they will likely face having to implement many layoffs, reducing their price of services, and overall making their services more accessible to the current economic situation of many individuals in order to attract consumers. Businesses facing price cuts for service will be at a higher risk of profit deficits as they reemerge, but for some it will be a necessary trade off to keep their clientele who likely have faced income loss themselves. “The new normal” will be scary for many businesses and much of it is highly unknown, but the one thing all business owners realize is that there is no way to return to pre-pandemic service as usual.