The major dangers faced by small businesses in 2020
While it’s often tempting to think of the global multinationals as being responsible for powering the world’s economies, actually it’s the Small to Medium-sized Enterprises (SMEs) or businesses that make the greatest contribution to national wealth by far.
In the US alone, 99.7% of employers are small businesses. That figure is mirrored in most other developed nations globally (e.g. in the UK, 99.9% of employers are SMEs). In the American private sector, SMEs account for 64% of employment, 46% of output and 43% of high-tech jobs.
SMEs are the lifeblood of developed economies. They are a country’s greatest asset. Yet, often through financial constraints, they are also the businesses most at risk of failure.
2020 – a year like no other
The challenges faced by small businesses are tough enough in normal times. However, 2020 has piled pressures on SMEs like no other time in history. The emergence of the coronavirus at the start of the year forced many shops, restaurants and other small businesses to close – apparently temporarily. However, as the year has progressed many have since found they simply can’t operate in times of social isolation, distancing and lockdown.
While no sector has been unaffected by the COVID-19 storm, the hardest hit businesses have been the arts, entertainment and travel and tourism markets. Nonetheless, no business – big or small – has had it easy this year.
The typical risks associated with SMEs in more normal times
Putting coronavirus aside, there are multiple other challenges that face small businesses on a day-to-day basis.
In 2018, there were 80,000 cybercrime attacks daily in the USA. This amounts to a staggering 30 million attacks per year. Globally, cybercrime will cost economies a predicted $6 trillion by 2021. Most cybercrime comes as a result of network security vulnerabilities, phishing, malware and ransomware attacks. To protect themselves, SMEs are urged to engage the services and support of professional IT networking companies like HLB System Solutions who will design and develop secure IT networks. Unfortunately, however, many still run networks with zero security. This runs the risk of infection, compromised data or, worst of all, complete network shutdown.
Unforeseen problems or interruptions
While coronavirus has proven itself to be the ultimate unforeseen complication, SMEs also typically face numerous other risks. For example, fire, flood, accidental damage, etc. It is essential SMEs have adequate building, contents and any other relevant insurance to run their business and cover potential losses.
Injured or absent staff
By nature, SMEs have a higher reliance on their staff than larger corporations. Primarily because they employ fewer people. If you’re running a small business, it’s wise to have contingency measures in place for times when key staff members can’t attend work. Over-reliance on staff causes significant issues for many SMEs and can result in service delays.
Late payments or no payment at all
It’s very common for small businesses to tread a thin line in terms of profitability. Often to the point that, in many cases, every job counts. Unfortunately, honor can be a rare thing in business and late payments (or worse yet, non-payments) are all too common in the corporate landscape. It’s vital that small businesses try to build up some capital to see them through the leaner moments and cushion the impact of payment problems.