Question

How did the Covid-19 pandemic affect the small business sector globally?

Answer 1

Covid-19 pandemic has hit the small business sector globally. Small business are facing a high risk of permanent closure. Around 75% micro firms are strongly affected by the crisis as compared with 45% of large companies. Small business possess fewer assets, minimum capital and very less cash reserves.In lockdown period when these firms were temporarily closed, these cash reserves and capital were unable to meet even the fixed cost like rent,wages of employees etc.As a result, chances for the permanent shut down of these firms increased. Many lost their job and even after the lockdown the production could not take up a pace due to less resources, capital and labour, Either these firms were permanently closed or they were operating in losses.

Unlike big firms which operate on a very large scale with more capital and cash reserves , these companies terribly failed to survive in the markets. Due to their failure, the total output drastically came down leading to economic crisis and loss of employment and GDP.