Part of the reason clients hire me is to give them an outsider’s opinion of the challenges or opportunities that are facing their businesses. I take this very seriously and as a result I am constantly scanning the economic horizon for changes that could possibly have an effect on these leaders and their organizations.
Over the past few months, I have been talking to more people than usual from around the globe in my quest to determine the changing impacts of the pandemic on small business. I believe that there are several unintended impacts that businesses are facing that nobody is really talking about but will affect us all as consumers.
Lack of product: Early in the pandemic ,we heard of factories that closed to protect their workers from disease. Most of these factories have long since reopened. However, if you are planning to buy your favorite game or toy for someone this Christmas, you might be in for some empty shelves. Unfortunately for many retailers, there is a lack of products to choose from. Not only was the supply chain disrupted with factory closures, the shipping of products from Asia has been severely hampered as a result of the fact that there are few available ships to carry regular everyday products to fill the shelves of your favorite stores. Suppliers are explaining to retailers across all sectors that shipping of their products is disrupted due to the amount of Personal Protective Equipment (PPE) required to fight the pandemic.
Higher costs: Not only are you going to have trouble finding parts for your car, Christmas gifts or your favorite clothing made in a sweat shop, the cost of these goods is going to be higher. In many cases, if suppliers have access to products, the shipping costs have increased substantially. Also, because there has been a shortage due to factory closures, demand is high. Your local restaurant faces the same challenge. There is a lack of available space in most restaurants due to new government requirements and in order to make ends meet many have had to raise their prices. The law of economics is that higher demand and lower supply equates higher prices. The government may be telling you that inflation is not increasing but your pocketbook will be telling you otherwise.
Labour: Higher prices are not only dictated by supply and demand, they are also being affected by labour costs and a lack of labour. There are a couple of factors affecting labour that will be costing you directly as a consumer. Firstly, government subsidies to workers during the pandemic have disrupted this supply. There are many businesses that need employees. However, in many cases they can’t find people willing to work for starting wages because these people have are happy to collect government subsidies and unemployment insurance payments. Additionally, in government or bureaucratic organizations where people have chosen to work from home, many feel that it is now their right to work remotely. Research has shown that work from home results in lower productivity, higher costs and technological risks, due to the fact that remote workers often feel marginalized and less loyal. In 2017, IBM recalled many remote workers after 20 quarters of losses, citing lower productivity as one of the reasons.
Mainstreet closures: While the stock market has rebounded, many small businesses are struggling to keep their doors open. Work from home, combined with fear has affected foot traffic in many locations. This has resulted in lower than expected sales. A report by the Info Credit Group this year found that a 10 per cent drop in sales will result in 70 per cent of businesses being unprofitable and 81 per cent of businesses will have a net loss if sales are down by 25 per cent. Businesses in many locations are quietly closing their doors without fan fare because they can’t make ends meet.
While most businesses have not been directly affected by sick employees, they have been affected by the pandemic and the restrictive measures put in place by health officials. The lingering and substantial effects including higher debt and higher taxes will take years for many to overcome.
- Dave Fuller MBA, is an award-winning professional business coach and the author of the book Profit Yourself Health. Impacted by the pandemic? I would love to hear email dave@pivotleader.com
