On Facebook today, I saw a post that we, in this coronavirus moment, should all bear in mind. It went something like this:
2000 – Y2K will be the end of us all
2001 – The terrorists are going to murder us
2003 – SARS is going to infect us
2006 – E-coli is going to kill us
2008 – The recession going to destroy us
2009 – Swine flu is going to slaughter us
2013 – North Korea is going to nuke us
2015 – ISIS is out to obliterate us
2020 – Coronavirus is going to kill us
So, while yes, we all need to calm down, it is nevertheless also true that we need to be diligent, and if you own or work in a small business, you also need to be smart and savvy.
Take China as a cautionary tale. Recent reports coming out of China indicate that millions of small businesses are on the verge of collapse. But that is also because 1) China has been affected and infected to a far greater degree than the U.S. (at least so far), and 2) Whole cities are in lockdown, guaranteeing that people cannot and/or will not venture out into public places like restaurants and stores.
Fortunately, nothing like that is going on here, at least not yet, and so the effects are far smaller. But, that said, smaller is not the same as absent. As the virus spreads, it will increasingly be felt by American businesses and workers.
Indeed, the U.S. and China do have this in common: Both countries are heavily dependent on small business for everyday goods and services. In China, 80% of business is small business, and in the U.S., that number is closer to 95%.
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Right now therefore, and not surprisingly, one of the first sectors of the American economy to feel the effects of the virus is the import market, especially those businesses who rely on Asian imports generally and Chinese imports specifically. With Chinese factories shuttered and the supply chain disrupted, many American businesses are starting to feel the brunt.
The next segment of the economy that surely is going to feel the ripple soon is the travel, conference, and entertainment sector. Are you thinking of delaying a trip this year? I know that I am, and I know a lot of people who are.
The upshot is that not a few small businesses have started planning for a downturn as a result of the coronavirus, even if they don’t feel it yet.
In fact, according to the great website SmallBizTrends, citing a survey from Veem, 27% of businesses expect the coronavirus to have a moderate to high impact on their revenue. Another 30% expect the virus to have a moderate to high impact on their supply chain. Even more revealing, over half or 52% say they are taking measures to prepare for an economic slowdown. They are increasing pricing, changing suppliers, decreasing operational costs or protecting cash flow.
Those are smart moves: Look to change suppliers now, lower your overhead to the extent possible, increase some prices, and protect your cash flow.
In addition, fiscal help may help. The Fed cut interest rates Tuesday by the biggest margin since the Great Depression. And the president (typically no friend of small business), is scrambling to find ways to blunt the most severe economic effects of the outbreak.
And while all of this is good to know, let’s not fool ourselves; this event is not insignificant. The U.S. Centers for Disease Control and Prevention says the coronavirus outbreak could cause a “severe disruption” to the lives of ordinary Americans.
But, that noted, fear will only make it worse; after all, Y2K turned out to be nothing but a computer glitch. This event will likely end up being somewhat more disruptive than that turn-of-the-century nonstarter, but certainly no 9/11 either.
Steve Strauss is an attorney, popular speaker and the best-selling author of 17 books, including “The Small Business Bible.” You can learn more about Steve at MrAllBiz.com, get more tips at his site TheSelfEmployed, and connect with him on Twitter @SteveStrauss and on Facebook at TheSelfEmployed.