The 2020 COVID-19 pandemic has vastly impacted the world. It continues to attack companies worldwide as a response to lockdown and further restrictions. Smaller start-up companies face a higher risk in comparison to Multinational companies (MNC). Listed below are just a few points that express how the pandemic has impacted start-up businesses and the challenges that they may face.
- The Recession
The UK has taken a perilous turn to another recession which has attacked the economy greatly. The lack of cash-flow and capital available to start-up companies has forced managers to freeze recruitment and offer redundancies, so impacting employment and creating a cycle. Additionally, this cycle can create a loss of demand for start-up companies. If one or more customers reduce purchase this could have a detrimental effect on the business (e.g. unable to pay suppliers). Furthermore, having a lack of raw materials or supply from either reduced global trading or cash-flow constraints have negative effects.
- Budgetary Constraints
The effects of budgetary constraints can spread onto various regions of the business. In particular, marketing. The marketing budget is usually one of the first to cut down. MNC can survive longer (couple of months) without marketing whereas smaller companies will be hit heavier with the lack of marketing. Essentially, if there is little to no marketing this can potentially result in the loss of demand from consumers.
- Government Rules and Regulations
In an attempt to reduce the speed of the virus, government officials and the priminitster have agreed for restrictions to take place. This means bars, pubs and restaurants will have to reduce their seating allowance, stop serving customers from 22:00 BST and only allow 6 people maximum for a party. Furthermore, smaller businesses will be hit harder than larger MNC as they would lose out on potential sales and revenues as less people will be allowed inside businesses.
Essentially, small businesses must learn to adapt to the new markets with COVID-19 around if they want to compete in the market. Start-up companies must learn to operate differently such as going digitally. For instance, a salon perhaps would launch meetings via Zoom if more than 6 people are attending or only take booked appointments. Nevertheless, the pandemic has impacted everyone and we all must work together to fight through and live safely.
Additionally, for further information regarding the pandemic please visit the GOV website as attached below: https://www.gov.uk/guidance/coronavirus-covid-19-information-for-the-public