COVID-19 is dangerous not only for public health. The pandemic is already having a serious impact on the global economy and forcing businesses to incur losses. (coronavirus affecting business) According to forecasts experts Capital Economics, the global economy will lose more than $ 280 billion in the first quarter of this year. We understand how the coronavirus affects business and what to do to protect ourselves from losses.
What areas are at risk?
The coronavirus has a negative impact on the economy as a whole. Director of the Department of Strategy, Policy and Analysis of the International Monetary Fund Martin Mühleisen called a sharp outflow of capital from emerging economies as one of the main consequences. The expert believes that it is this factor that will have the most negative impact on the world market. This problem will take a long time to resolve.
Nevertheless, there are certain areas that, according to experts, will suffer more than the rest of the business. Alena Vladimirskaya, head of the Career Laboratory project, voiced the TOP-5 who will be most affected by COVID-19:
Tourism and airlines
Restaurants and cafes
Retail selling non-products
Offline entertainment (concert organizers, theaters, circuses, amusement parks, etc.)
This does not mean that business will not have any impact on other areas. But it is these 5 that will suffer the most. Although other businesses are also experiencing problems.
Termination of supplies from China
Due to the coronavirus, there are significant supply disruptions from China. It’s not just retailers who sell Chinese-made goods that suffer from this. Local producers in many countries do not receive equipment or raw materials.
For example, at the end of February, the factories of the Nissan concern in many countries were forced to stop production due to the interruption of the supply of spare parts. Factories do not operate in Japan, America, Mexico, Spain and other countries.
Small and medium-sized businesses also suffer from supply disruptions. For example, American businessman Jonathan Bass, owner of a furniture and household goods firm, said that many of the parts needed for production were stuck on the way from China. The entrepreneur believes that very soon he will have to look for new suppliers.
But the electronics market suffers the most. China produces about 60% of the goods on this market, and due to the stoppage of production, equipment is not supplied to countries and does not appear on store shelves.
How does quarantine affect business?
Self-isolation and quarantine remain one of the most effective methods to combat the spread of the virus. For this reason, in many countries, including Russia, people are advised to go out on the street less and not to visit crowded places.
Many companies, in order to protect their employees, are forced to transfer them to remote work.
Restaurants, cafes and entertainment are suffering from the quarantine. Restaurants and cafes have already been closed in Syria, England, France, Spain, and Czech Republic. This may soon happen in Russia as well.
In the Krasnodar Territory, the authorities recommend stopping the work of restaurants, cafes and entertainment clubs until May 1, and in Moscow, some public catering points have already closed to the public and work only as a food delivery service.
By order of Sergei Sobyanin, events in rooms with more than 50 people are prohibited. Many cultural events are canceled due to the virus. All public events are prohibited until April 10. This affects event organizers, concert halls, sports grounds, etc.
According to forecasts, due to the virus, restaurants and cafes in Moscow and St. Petersburg will lose more than 30% of their profits in the first quarter of 2020. Entertainment venues have lost more than half of their customers due to the coronavirus.
The service sector also bears losses. Attendance at fitness centers and spas has dropped by 40%. And about 20% fewer visitors to hairdressers and beauty salons.
Is there a positive impact of the virus on business?
For some businesses, COVID-19 has been a disaster. But someone manages to make good money on the pandemic. First of all, these are pharmaceutical companies and pharmacies, delivery services and the field of online entertainment.
Pharmacies benefit from the sale of masks. According to DSM Group analysts, their sales in Russia have recently tripled. In food delivery services in Russia, the number of orders increased by 20%.
Online cinemas are now actively conducting various promotions, and are opening free viewing of films for those who are in quarantine. But it is too early to talk about growth.
Russian viewers continue to actively go to offline cinemas. Over the past weekend, according to the Unified Federal Automated Information System for information on screenings of films in cinemas, more than 2 million cinema tickets were purchased.
The demand for online games is growing. And if in Russia this is still not felt, then in the world market the demand for mobile applications and games has grown by $ 150 billion, and in China networked computer games have become more popular by 40%.
How to avoid losses during the coronavirus?
There is no universal recipe. It all depends on the area of your business. Perhaps you are out of risk group and the pandemic will not affect you at all or even make a profit. Here are some tips on what you can do to protect yourself from large losses:
If possible, transfer your employees to remote work. If employees are sitting at home and not in the office, the risk that they will become infected and infect each other is much less.
Work through a worst-case scenario and determine in advance what action you will take.
Review your budget. Avoid spending as much as possible.
Increase your reserve fund. The stock of funds “for a rainy day” will not be superfluous.
Do not take on commitments if you are not sure that you can fulfill them.
Assess your sales prospects. If you understand that there will be a decline in demand for your product, now you need to make every effort to earn as much as possible.
If you are at risk, the main thing is not to panic. Try to do everything that depends on you. But remember: sometimes the situation is such that nothing can be changed. Remember that the virus will be defeated sooner or later. And then everything will work out.