The Comprehensive Guide on How Coronavirus Will Impact Your Business


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The current coronavirus outbreak is dominating the public consciousness. According to a consumer survey by Bospar, 55.3% of Americans are afraid of contracting COVID-19 (the disease the virus causes) this year. Although some areas are currently more affected than others, the impact of the virus is widespread, leaving business owners and consumers worldwide in a state of uncertainty.

Many organizations are shifting toward encouraging or mandating their employees work remotely. Along these lines, select schools from California to New York have closed or transitioned to online-based coursework, the NBA has canceled its season and several college basketball tournaments have been canceled. Notably the White House announced that the vast majority of travel from Europe to the U.S. would be suspended for 30 days starting at midnight on March 13.

As the Centers for Disease Control and Prevention (CDC), and other health agencies continue to monitor the outbreak and implement testing and prevention procedures, thousands of individuals around the U.S. (including some government officials) are in self- or government-mandated quarantine. 

Ultimately, with much still unknown in regard to the spread of the novel coronavirus and its effect around the world, U.S. stocks fell 7% on March 9—the worst day for the market since 2008—and plummeted again three days later on March 12, which was immediately dubbed “Black Thursday.” 

At this point, lawmakers, businesses, and individuals alike are still determining what to expect from this outbreak and how to prepare for a variety of outcomes.

How Your Small Business May Be Impacted

As we’ve started to see, the spread of the coronavirus is and will likely continue to affect businesses around the world, with large news outlets like the New York Times and Forbes already reporting on specific small businesses who have been experiencing the effects of COVID-19 directly. 

An executive briefing on the possible implications of the virus on businesses from consulting firm McKinsey states:  “A range of outcomes is possible. Decision makers should not expect the worst.” McKinsey breaks down their analysis of these outcomes into three overarching scenarios—quick recovery, global slowdown, and global pandemic and recession (as you can see in the image below).

Image source: McKinsey

On the whole, although this briefing looks at business on a larger and more global scale, one thread throughout the McKinsey evaluation is particularly relevant to small businesses: much is still unknown. In this way, it’s difficult to determine how, when, or if your small business will be affected.

When it comes down to it, it’s likely that the effect of the pandemic on your business will vary based on a number of factors—including your business’s industry, what your business does, where your business is located, and more. Nevertheless, it’s still worth considering some of the ways (both negative and positive) that your business may be impacted and what you can do to prepare for these possibilities.

Possible Negative Outcomes

Generally, as a small business owner, the negative effects you may experience from the coronavirus will fall into two distinct categories: loss of business and sickness. 

First, as the drop in the U.S. stock market has shown, the uncertainty surrounding COVID-19 has made investors anxious and the economy relatively unstable. For small businesses in particular, these insecurities could manifest in a few ways:

Less Traffic to Your Business

If you’re a brick-and-mortar business, particularly in areas that have been most affected by the virus, you may see a decrease in traffic as consumers stay home, self-quarantine, and generally implement social distancing. Although the reasoning behind a slowdown may be slightly different for ecommerce businesses, online stores may see fewer purchases as customers are reluctant to spend money on nonessentials. Along these lines, businesses in particular industries—travel, tourism, events, even certain restaurants and retailers, will be more likely to experience this impact—once again, especially if they are located in or work with locations that are more seriously affected by the current outbreak. 

When Fundera talked to Steve Silberg of Fitpacking (a backpacking adventure company), he said: “My small business is grinding to a halt due to coronavirus because nobody wants to travel.” 

Similarly, Matthew Meier, founder of MaxTour told us that despite taking additional safety precautions in their tour vans and on their tours, “The cancellation rate for our tours is around 60% and sales are down almost 75%.”

Supply Chain Interruption

In addition to the risk of losing business from customers, small businesses may also find it difficult to access supplies and receive shipments from their vendors as the coronavirus continues to spread. So far, these supply chain interruptions have mostly been experienced by businesses who source products and supplies in China, but it’s possible that the uncertainty in the market and the demand of particular products (hand sanitizer, soap, cleaning supplies) over others will also impact the general flow of goods to small businesses. 

According to Yungi Chu, who owns an online headset selling business in California, “The coronavirus has affected almost all our suppliers and manufacturers in China. Most of the factories I order from are currently shut down or have been shut down the last month. We have many customer orders that are canceled due to no stock and a list of backorder items that will soon be canceled if the situation doesn’t improve.”

Staffing Problems

Putting aside the risk of sickness, many small businesses may also experience staffing issues due to the outbreak. Many individuals who have traveled abroad or come into contact with others who have or might be affected are in self- or government-mandated quarantine. Additionally, many individuals are afraid to travel, take public transportation, or generally interact with the public—which can mean serious staffing concerns if your business can’t operate remotely. 

Although some businesses may be able to adjust to alternative working setups, it’s likely that local retailers and restaurants, as well as other customer-facing businesses will experience these effects most greatly. In this way, if businesses are unable to run remotely or staff their brick-and-mortar stores, they face a greater risk to not only lose money, but generally to be unable to open or be forced to close permanently as well.

Travel Restrictions

Of course, as we’ve mentioned, travel- and tourism-related businesses will likely experience some of the biggest negative effects from the outbreak of COVID-19—and already have, in fact. But small businesses in general might also feel the effects of the lack of travel and travel restrictions. For instance, with fewer individuals traveling, businesses that rely on client meetings or other forms of general business travel are likely to experience negative effects. Event-based businesses will likely also see negative effects from the decrease in travel. Large-scale events like SXSW, Coachella, and others have been postponed to later in the year.

As we mentioned above, the White House has announced a 30-day suspension of the vast majority of travel from Europe to the United States, starting on March 13. (This does not apply to the United Kingdom.)

coronavirus and airlines chart

This infographic shows how airlines may be affected by the COVID-19 outbreak. Image source: Statista


Of course, underlying all of these possible scenarios that could lead to a loss of business is the threat of sickness. As we’ve mentioned, there is still so much uncertainty about how the virus is spread and what the upcoming months will hold. Some experts are estimating anywhere from 40% to 70% of the population will come down with the virus, but the truth is, we really don’t know. 

With the threat and possibility of actual sickness, however, businesses are likely to see an impact. Due to closures of schools, workplaces, and quarantines, business owners and individuals alike are having to adjust their daily routines—which can mean a slowdown in business for a number of reasons. 

For example, we talked to Amy Baxter of Buzzy 4 Pain Relief, who has not yet experienced significant effects on her business, but she made an interesting comment. She said: “As an all-woman company, school closures will impact our productivity the most, but so far in Georgia we’re holding tight.” 

As Baxter alludes to here, the closing of schools as a result of the outbreak has an effect on parents who need to quickly find childcare—making it more difficult for them to continue to work or run their business as normal—and women, in particular, tend to see an outsize burden in this regard. 

Possible Positive Outcomes

Despite all of the general fear, anxiety, and uncertainty businesses and consumers are facing, it’s worth looking on the brighter side too—considering the positive ways in which businesses may be affected, as well as the actions that are being (or already have been) taken to help small businesses during this time.

Of course, discussing these possibilities is not meant to minimize the seriousness of the pandemic, instead, we hope to remind you of the resilience of small businesses and surface opportunities and courses of action that you may not have known were available to you.

Increase in Businesses

As unlikely as it may seem, depending on where your company is located and what you do, you might actually see an increase in business. Along these lines, whereas travel, tourism, and event businesses are most likely to be negatively affected by the spread of COVID-19, healthcare businesses, financial services businesses, consulting businesses, and even grocery stores are some of the businesses that may see sales and demand increase.

In fact, we talked to a few different business owners about how they’ve seen their operations perform positively as a result of the virus outbreak. For example, Mark Evans owns a summer camp consulting business where he works with camps to improve their marketing, recruitment, and safety certifications. Although Evans says that in the long term, he can see coronavirus impacting his business negatively, right now, he has experienced an almost 50% increase in his business compared to last year. He said:

“A lot of camps all across the United States are experiencing a decrease in enrollments for the summer. Due to this, they are looking for marketing help to try and increase recruitment. With it being peak recruitment time for camps right now and with the coronavirus being a very hot topic in the media, parents are hesitating to enroll their child in camps. [Therefore] I’ve had a lot of camps reach out to me asking for marketing help.”

Similarly, Steve Levine, president and CEO of AtmosAir Solutions, also told us that his business has increased significantly as a result of the coronavirus. Because Atmos Air Solutions provides indoor air quality technology that kills airborne viruses and viruses that reside on surfaces, Levine says he’s received an increased number of inquiries—from businesses and commercial real estate companies in particular. He also mentioned that in response, Atmos Air has stepped up sales and marketing to try and meet the interest and demand.

This being said, although this increase in business may be short-lived and will very likely only apply to certain types of businesses, it’s worth thinking about new and different ways your business may be able to serve your customers during this time, even if you don’t fall into one of these categories.

Financial Relief

As a small business owner, perhaps one of the biggest reasons that you’re concerned about the possible effects of coronavirus (other than for general health and well-being) is finances. Many small businesses operate on tight budgets and this market and consumer uncertainty can mean big problems for your finances—even possibly leading to concerns about paying your rent or mortgage, paying your employees, and affording general necessities. 

Luckily, lawmakers and officials have anticipated these concerns and have already taken actions to mitigate the impact of the virus for small businesses specifically. On March 10 the U.S. Committee on Small Business held a hearing to discuss “The Impact of Coronavirus on America’s Small Businesses,” where they heard from health experts, economists, and small firms disrupted by the virus with the goal of working to establish best practices to prepare for and react to the pandemic. 

On March 3, the Federal Reserve cut interest rates by half a percent—making it easier and more affordable for businesses who do need financing right now to get capital.

Also at the federal level, President Trump has signed a law granting a $8 billion emergency funding package to support small businesses impacted by COVID-19. Additionally, on March 11, Trump announced that he is instructing the SBA to provide low-interest capital to businesses affected by the coronavirus pandemic. The SBA will begin providing Economic Injury Disaster Loans in affected states and territories. Trump also stated that he’s asked Congress to increase funding for this SBA loan program by $50 billion. Learn how to apply for a coronavirus business loan here.

Moreover, President Trump plans to instruct the Treasury Department to defer tax payments without interest or penalties for individuals and businesses negatively affected by the COVID-19 pandemic. Along these lines, Trump also announced that he’s asking Congress for immediate payroll tax relief.

For more on Trump’s response to the outbreak and the impact on small businesses, click here.

On more local levels, officials have taken action as well. In New York City, Mayor Bill De Blasio has announced that businesses affected by the virus will be eligible for an interest-free loan program. In Seattle, Mayor Jenny Durkan has announced that the city will not shut off water and electricity service during the city’s coronavirus emergency—plus, some small businesses will be able to defer city and occupation tax payments. Additionally, Durkan has said the city will set up a small business recovery task force and her administration is working on budget legislation that would allow the city to support lower-income microbusinesses who have been impacted with stabilization funding.

Private companies have even rolled out new initiatives to help support both consumers and their fellow businesses. Amazon, for instance, has announced that they’re creating a $5 million Neighborhood Small Relief Fund to provide cash grants to local small businesses who have been negatively impacted by the COVID-19 outbreak. Amazon is also subsidizing rent for businesses inside the buildings it owns. 

Similarly, other Seattle-area and large tech companies have announced different plans to combat the effects of the outbreak. Google, for example, has decided to give G Suite and Education customers access to their advanced Hangouts Meet feature until July 1. With access to this feature, users will be able to work or learn remotely more effectively—with tools to record and save meetings, live streaming capabilities, and more.

Ultimately, although these small upsides and contingency plans do not overshadow the negative effects of the virus outbreak, it’s important to remember that there are specific actions being taken and plans in place to help small businesses through this time of uncertainty.

How Your Business Can Prepare

So, with all of this information in mind, you might still be wondering: What can my business actually do to prepare and combat the effects of the coronavirus outbreak? Luckily, despite the continued spread of the virus and the general anxiety and uncertainty that prevails in the public, there are concrete actions you can take as a small business owner. As we discussed in regard to negative outcomes above, the actions you can take will largely fall into two categories. 

First, of course, there are actions you can take to promote health and prevent you, your employees, or your customers from getting sick or spreading the virus, and second, there are actions you can take to prevent a loss of business and protect your finances.

Preventing Sickness

Health is at the heart of this issue, so as a business owner and individual, you’ll want to do everything you can to promote the well-being of your staff and employees. 

Follow CDC Guidelines

The first and one of the most important things you can do is to follow the CDC guidelines. These guidelines include the precautions you’ve likely been hearing or seeing in the news—wash your hands, don’t touch your face, stay home when you’re sick, avoid contact with people who are sick, etc. Of course, these are all the more important for people in higher-risk populations, including older individuals, as well as those with preexisting respiratory conditions. Additionally, if you think you or one of your employees has been in contact with someone who has COVID-19 (or you think you’ve been infected), you’ll want to make sure you take the appropriate actions and seek medical advice.

Moreover, as a business owner, you’ll not only want to make sure that you’re following these guidelines, but also that you’re actively communicating with your employees and advising them about actions they can take to stay safe. Along these lines, as we’ve seen, many businesses have transitioned to remote work, so that’s something you might want to consider—especially if your business is located in a largely affected area. 

CDC coronavirus advice

COVID-19 prevention guidelines. Image source: CDC

Review Work From Home and Sick Leave Policies

To this point, it’s also a good time to reevaluate your work from home and sick leave policies and evaluate what you can do to keep your employees as safe as possible, while also continuing to run your business. As you might imagine, transitioning to a remote workforce will be easier for some businesses than others, but it’s important to do whatever you think is best for everyone’s health. 

In this way, as you build your plan and communicate with employees, you might also find it helpful to speak to an HR professional or business attorney to determine how to ensure that you’re crafting these policies in the best way possible—especially to avoid discriminatory practices.

Clean Your Workspace

With all of this in mind, whether you decide to operate remotely or work at your business location, it’s also a good time to clean your workplace. If your office or business location will be empty, it’s worth investing in a cleaning service or cleaning the space thoroughly while no one is there. If you continue to operate in your location, you may still decide to do a thorough cleaning of your space, as well as advise employees how they can continue to keep their space clean as the outbreak progresses. Along these lines, frequently cleaning your business location is particularly important if you have customers or clients coming and going.

Stay Informed and Communicate Proactively 

Finally, it’s also important to stay informed, overcommunicate, and adjust based on the way the outbreak develops. Although constantly watching or reading news reports about the pandemic can increase anxiety and fear, you should make sure that you have an overall sense of how things are changing or progressing, especially as it relates to your area and your employees. 

In this way, you should be prepared to constantly communicate with your employees about what’s going on, what they should be doing with regard to their work, and how they can stay safe and healthy. If officials in your city decide to quarantine certain locations or individuals, you’ll want to be sure you’re aware of these updates and follow the safety guidelines that are given. Similarly, if local officials advise of a certain course of action—as Mayor De Blasio did in New York City, saying businesses should encourage employees to work from home if possible—this is something to take into serious consideration, as well. 

Ultimately, as we’ve discussed at length thus far, there is a lot of uncertainty and unknowns when it comes to COVID-19 and how it will continue to affect small businesses and the larger global community. Therefore, it’s important to take any and all actions you can to help protect yourself, your family, your employees, and your customers.

Mitigating Business Interruption

As we mentioned, the second thing you’ll want to do to prepare during this coronavirus outbreak is to develop a plan to mitigate the potential loss of business and to protect your finances. Although the specific plan you construct and actions you take will likely be unique to your individual business, you might keep the following suggestions in mind.

Evaluate Your Finances

Like we discussed above, finances are one of the biggest concerns for small businesses during this time of uncertainty and unknowns. Therefore, one of the most important things you can do is take stock of your current finances and make plans for the immediate future. You might evaluate how much money you have in savings, what your inevitable costs are, and ways that you can save money or cut costs now. 

Jeff Burkland, founder of the financial firm Burkland and Associates, recommends that businesses take the following five steps:

  1. Consider cash conservation.
  2. If your business has less than nine months of cash, consider accelerating your fundraising or adding debt.
  3. Work with your CFO and finance team to develop contingency plans for a possible revenue decline.
  4. Develop cost-saving measures that can be implemented quickly.
  5. Continue to work with your CFO and finance team as market conditions change.

Ultimately, since it’s difficult to know how the market will change and how this virus outbreak will affect your business, it’s also difficult to know exactly what to expect in terms of your finances. Nevertheless, thinking ahead and creating a plan for the immediate future can help protect your business from suffering financially down the road.

Assess and Manage Your Supply Chain

Another thing you can do to mitigate the possible effects of coronavirus on your business is assess the status of your supply chain, and if it’s been impacted, see if there are any actions you can take to fix it. You might reach out to your vendors and discuss what they’re doing during this time, if they’ve been experiencing delays, and if there are any options to prevent a loss of supplies. 

If your vendors have been affected, you might try and see if there are alternative sources of goods you can tap into. Unfortunately, depending on the products you sell, it’s possible that a delay in supplies from your vendors will seriously impact your inventory and ability to run your business. If you can’t get immediate access to your goods, you might try to evaluate your current inventory and see how you can work with the products you have until your supply chain is restored.

Consider Business Interruption or Disaster Insurance

If your business doesn’t already have business interruption or disaster insurance, now may be the right time to look into these policies. In short, business interruption insurance is a type of policy that covers lost income and operating expenses when a disaster causes a slow in operations or your business to temporarily close. Typically, business interruption insurance will cover lost income, payroll costs, business loan payments, taxes, lease mortgage payments, and relocation costs. 

This being said, however, generally this type of insurance is designed to cover disasters such as fire, vandalism, riots, and some natural disasters. Therefore, because a pandemic like COVID-19 doesn’t fall under one of these traditionally covered events, you’ll want to talk to an insurance provider about how any policy may or may not cover loss of business due to this outbreak.

Additionally, another type of insurance you might want to consider during this time is key person insurance. Key person insurance is a policy that covers your business in the event an owner or critical employee becomes disabeled or dies. As alarming as this may sound, it’s important to prepare for all possibilities, especially if an owner or key person in your business falls into the population that’s at higher risk of having a serious case of COVID-19. 

Invest in Opportunities That Are Available

On a brighter note, despite the seriousness of the outbreak of the coronavirus, your business will certainly want to consider taking advantage of any opportunities that are available to you. As we mentioned above, the Federal Reserve dropped interest rates, which means business owners have an opportunity to receive financing at a very low rate. 

According to Ethan Glass, a credit analyst at Fundera, “as companies can assume a slight downturn in business from COVID-19, now is the best time to look at financing while their financials are strong before the effects of the virus leave their mark.” 

He explained further that with the lowered interest rate, the interest rate for SBA loans will also be the lowest it’s been in years—meaning guarantors will be making lower monthly payments, which puts borrowers at an advantageous position when trying to qualify for a loan. 

Therefore, although you won’t want to take on any debt that your business can’t afford, if you have strong financials and were thinking about applying for business financing this year, now may be the right time to explore your options. 

Moreover, you’ll want to keep an eye on actions that are being taken in your area—as we mentioned in regards to Seattle and New York City above—to find out if there are relief programs or other opportunities that your business can take advantage of. 

Communicate With Customers

Finally, with all of the uncertainty surrounding this pandemic and its possible effects, it’s more important than ever to communicate with your customers. As you’ve probably noticed, many companies have sent out emails responding to the outbreak of COVID-19, informing consumers what they’ve been doing to combat the spread of the virus and what they can expect from their business. 

Additionally, if you expect your business to be closed, have lower inventory, or any adverse effects from the outbreak, it’s worth communicating this information with your customers ahead of time. For example, if you own a consulting business and are shifting to calls and online meetings instead of in-person, on-location meetings, you might decide to send an email to existing customers, post this update on social media, and even update your hours on your Google business profile. 

Although you may not be able to completely mitigate any negative effects of the pandemic on your business, by staying in touch with your customers, you’ll be putting your best foot forward to ensure that they know what’s going on and hopefully, when they’re able to, they’ll purchase from or work with your business.

rent the runway's email response to coronavirus

Here’s an example of an email that clothing rental company Rent the Runway sent to their customers. Image source: Rent the Runway

Infographic: What Small Business Owners Need to Know About Coronavirus

Refer to this useful infographic to understand how the Coronavirus Outbreak affects small business owners and how they can prepare and weather the outbreak.

Coronavirus and Small Business Infographic

The Bottom Line

At the end of the day, the COVID-19 pandemic is undoubtedly serious. With so much uncertainty and so many unknowns, businesses and consumers are understandably concerned about how they’ll be affected and what they should do. At this point, however, by thinking ahead and actively preparing for any possible effect on your business, you’re taking the right next steps. Plus, as the situation continues to develop and new information becomes available, you can adjust your plans and strategies accordingly to do what’s best for you, your employees, and your business as a whole.


Randa Kriss

Randa Kriss is a senior staff writer at Fundera.

At Fundera, Randa specializes in reviewing small business products, software, and services. Randa has written hundreds of reviews across a wide swath of business topics including ecommerce, merchant services, accounting, credit cards, bank accounts, loan products, and payroll and human resources solutions. 

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