Covid has had a profound impact on businesses around the world, with many forced to cease trading for large periods due to the lockdown restrictions put in place by governments striving to slow the spread of the virus.  A recent paper explores the true scale of the impact on small businesses in Finland and finds that while larger firms were often able to continue servicing customers, smaller firms struggled to keep going.

The researchers highlight the particular impact on businesses in the travel and hospitality sectors, who have all suffered due to the lockdown measures.  By contrast, firms operating in areas such as online retail, pharmaceuticals, and information and communications technology, have all thrived.

Face-to-face interactions

Smaller firms were especially affected by the virus because they rely far more on face-to-face interactions with customers for both marketing and transactions.  The researchers also say that smaller firms struggled with supply and logistics and their ability to deliver their goods and services was affected.

What’s more, the Finnish companies surveyed for the research also expressed growing pessimism around their prospects of selling into or supplying the Chinese and Russian markets.  The authors suggest that as we emerge from the pandemic, there will be clear differences in approach between firms in the sector, with larger firms able to utilize air freight more, whereas smaller firms will be more reliant on rail transport.

They believe that as the difficulties faced by small businesses become more apparent, more work is needed from both academia and policymakers to understand how the sector is likely to fare in the months ahead.  Previous events, such as the 2008 financial crisis had significant long-term implications for small businesses, and while the full implications of the pandemic are not yet known, the implications are likely to be as big, if not bigger.

What does appear clear, the researchers conclude, is that sustainability will be a crucial factor in the post-Covid economy, so it’s vital that businesses are able to build this into their business models as soon as possible.