Swim now, or sink later-What small businesses need to do, now. Enigma Follow Apr 6 · 6 min read

A photomontage about coronavirus, created by me.

We live in dangerous times. We all know it. We, not as a nation, but as a species, are combating a threat. Not only for our seniors, not only to people in a certain risk group, not only of a certain age group. To us all. In the mere last half year, we experienced the heaviest epidemic since the spanish flu. We are yet to understand how to combat this epidemic exactly. We also don’t know what impacts this epidemic will have on our economy, we dont know how it will impact us all. This paper is created to analyze the effect the virus will have in both the long-and short term view, and what a small business needs to do to survive. It is based on both studies and logical conclusions, signaled by an inline citation or note. It is important to note that this paper is only a hypothesis, and should be viewed as such.

First part: Unsustainable- Psychological impact of the epidemic

Right now, we only know that these effects will change the world -in terms of economic change, also as in terms of psychologic impact on people. A study from 2013, commissioned by the German Bundestag, suggests that a SARS like virus might impact over 40 million people in Germany alone with heavy psychologic effects.(1) (2) Psychologic effect of diseases is well documented, and the Pan American Health Organization, a regional office of the WHO, has published a paper about the impact of diseases, especially Coronavirus, on mental health. (3)

“The high number of people who sicken and die and vast economic losses associated with an epidemic or pandemic lead to a high psychosocial risk. Post-traumatic stress (or certain symptoms of it) appears later or is a delayed type of disorder <…> experiencing a major epidemic -” PROTECTING MENTAL HEALTH DURING EPIDEMICS- Pan American Health Organization

You, the reader might ask yourself how a psychological effect has an impact on our economy. The answer is quite logical. States like the United States, who rely on basic, privatized healthcare, fail at providing psychologic help on a high level, because a high percentage of the popularion cannot afford this type of help. Due to their social status and their income, people with a lower than average income will not be able to get help with PTSD, therefore suffering from it. (4) Thus, their work efficiency dramatically decreases. The economy will need to provide this help. This effect has been observed in similar ways after the internal conflicts of Ireland, although Ireland did not suffer from a nation wide lockdown. To conclude this part, an economy based on private healthcare is unsustainable.

Second part: An recession is imminent

It is important to note that these aforementioned effects will only begin to be noticeable after the main quarantine is over, and people begin to strive back to a normal work routine, if possible. Note the “if possible”. During the lockdown we are experiencing right now, almost every business is endangered. Companys were forced to realize suddenly how unprepared they were, and how much needed to be done to prepare for an global catastrophe of this size. Not even the best preparation in the world would have been able to prepare us for such a long lasting lockdown. Do a virtual walk on your next street. Do you know how many of these small businesses are endangered? All of them.They are running out of funds. The small cafe next door, with the old lady from Oregon selling handmade cakes, is closed. They have no customers, but they need to pay their rent. The computer technology store in the next street, is closed. Nobody to sell computers to right now. These measures are indeed necessary to prevent further spread. When this epidemic is over, a high number of businesses will have ceased to exist, and we will enter the greatest recession since 1929.

A Goldmann Sachs poll of 10000 small businesses showed that over 50 percent of the businesses owners indicate that they will only be able to operate with their current funds for a maximum of 3 months.(5) After the first wave of this epidemic is over, a very large number of small and mid-sized business will be closed due to lack of funds. Additionally to that, big companies are laying off many employees, causing high unemployment rates, with one of the highest increases ever recorded. The effects of this are very clear; a long lasting recession. As a matter of a fact, it might have already started. This is visible when observing course movements of the S&P 500 over the last 6 months.

This data is provided by boerse.ard.de

The charts indicate a high volume drop in the course of the last months. The S&P 500 is currently very volatile, experiencing high drops and recoveries every day. Where is it going to be tomorrow? Or next week? No one knows. To conclude the second part, the epidemic will have a heavy impact on both the economy and small to mid size businesses, while even big business such as cruise companies, will feel an heavy impact.

Third part: Think or sink, or rather swim now, or sink later.

We learned from the first two parts that the epidemic will affect a large number of business owners. It is clear that many businesses have no direct income at this moment and will not be able to operate in the future. Here is what they need to do.

A shift of their modus operandi is required, and needs to be taken into effect right now. However, it is important to note that the problem is not only fixed by just simply shifting to an online-first approach, though this is a great idea nonetheless. The competition is massive, and a certain uniqueness is required. Why should somebody order a PC at a local store instead rof at Amazon? It is very likely that Amazon provides a better, faster delivery.

The answer is very simple - because you provide a better service. You, as the local hardware store from my example, are able to upgrade the customers pc and you are able to provide hardware and pcs to one’s need. Amazon can’t do that, but you can. Let’s see the other example I mentioned before-the cafe of the old lady selling homemade cakes -it sounds hard -but she needs to also shift their priorities to an agressive online appearance -marketing her cakes for the town, and if possible for the whole state. Is Cakes over Mail a thing? It should be. If you are a business owner in need of a change of modus operandi, here are a few tips.

Be flexible and able to shift fast. This is probably easier when not heavily

established into an industry.

Be unique- provide a service others can’t. Observe your competitors, and

how they work. Then work better.

Be agressive - In an economy based so hard on competition, you need to

have an agressive schedule. If needed, target ads towards customers of your competing company and tell them how you provide better service.

Be innovative- Try new approaches, something that hasn’t been done

before. How about food delivery via small drones?

Swim now -change your modus operandi -or sink later. It’s your choice. You can do it.

About the author

I, Malte I. Lauterbach, am a German high school teenager, commonly talking about investment, crypto technologies and -currency, entrepreneurship and politics. I work as the media manager @replit. Feel free to contact me if you find grammatical mistakes (malte@repl.it)

Sources&Annotations

(1) Bericht zur Risikoanalyse im Bevölkerungsschutz 2012

(2) Population of germany=82,79 million (est 2018)

(3) PROTECTING MENTAL HEALTH DURING EPIDEMICS-PAHO

(4) For reference, I am not from the US, so sightings might be overestimated. Take them with a grain of salt.

(5) https://www.axios.com/small-business-owners-coronavirus-survey-06e04322-7788-4de4-8216-42b875a39e53.html