02/06/2021
Small Business Continue to Struggle with Pandemic Era
Small business owners over the US continue to struggle with the unprecedented pandemic era. Forbes reported on Nov 19, 2020 that 300 small businesses that had received the Paycheck Protection Program had filed for bankruptcy. The small business sector continues to lose its market shares while large corporations are increasing their profitability. For instance, Microsoft reported on Jan 22nd, 2021 that revenue has increased by 17% and net income by 33% compared to the same period last year. Similar stories have been posted by Amazon, Chick-fil-A, Google, and other big corporations.
All of these stories bring the question: why is it that small companies have lost their shares while the large corporations continue to prosper exponentially?
A recent report from Moscow University offers some answers - big companies have reacted to the current situation much quicker and have shifted their focus to more profitable segments of their company’s operation. On the flip-side, small companies with limited resources often fail to make changes in the same way, instead of focusing on trying to survive using the same old strategies as before.
Another reason is that big corporations were preparing themselves for a time like this. For instance, on Jan 18, 2010, Bill Gates wrote on his blog regarding Microsoft’s response to the H191 influenza crisis: “Better response to the next pandemic.” Many companies took his words seriously and created a contingency department to react to disruptive world events, whether a pandemic or something else.
In contrast, small corporations are in a reactive mode. They do what the government will propose and take subsidies while failing to develop alternative plans to move or restructure their business in an innovative way. Investor & blogger Igor Ribakov, a Russian billionaire, suggests using another approach for small businesses, finding ways to expand their industry to include new things similar to what they are doing now. For example, restaurants finding ways to deliver food rather than relying on indoor dining.
Of course, many small companies will find excuses for why they can’t adapt like other companies, saying that the big corporations have cash on hand to survive this short period of time, while they work from paycheck to paycheck. Another reason might be that they inherited the business from their grandparents, and their legacy is to keep the same business model in order to pass the company onto the next generation.
The COVID-19 pandemic has taught the business world several great lessons. The first is that companies need to prepare themselves for success but also be able to anticipate & prepare for difficult times. As Vasiliy Klimenko stated in his article in the magazine Kanon, “if you don’t plan your success, you’re planning your failure.” Second, if there is a crisis, businesses must react quickly and strategically to adapt to new circumstances, changing their business plan as necessary to stay afloat. Lastly, it is important to get ahead of issues rather than simply reacting to new changes. By implementing these lessons, businesses can be better prepared for the next crisis, whenever it may be.
