As Nigeria grapples with the impact of the coronavirus pandemic, businesses in Nigeria are increasingly worried that they could be hit hard if the current situation gets worse.
Many companies are already battling through disruptions caused by the virus sweeping through the world. The most significant losses have been recorded with enterprises that are dependent on imports from high-risk countries, where widespread lockdowns have shut down manufacturing activities.
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Although most Nigerian SMEs are still open for business, they may want to know how they will be affected if the present situation persists or intensifies. This article lays out some likely impacts. But it also suggests ways that these effects could be mitigated.
Possible Ways the Corona Virus Pandemic May Affect Small Businesses
1. Lower Sales
This is perhaps the most obvious effect for most businesses. Many would be customers will want to limit their movement in these times. They may not be as enthusiastic about making purchases as they used to. And even if they are willing to buy things, they might also be short of cash to make purchases, perhaps because their incomes have also been impacted.
If a total lockdown is enforced, sales numbers could shrink even more sharply.
2. Supply Chain Disruption
If you are a manufacturer or wholesale agent, your supply chain could be adversely affected. You could feel this more severely if the government enforces a sweeping restriction that affects some of the vendors or retailers along your chain, or if retailers say they don’t need your stocks because they have unsold stock.
3. Inability to Stock Up on Inventory
As we mentioned earlier, some businesses are already experiencing this. They sell products that are either imported or partly made using imported inputs. If businesses sell products from countries for which travel restrictions exist, they could eventually run out of stock, and won’t be able to replace them.
4. Stressed Staff
If the coronavirus pandemic persists, Nigeria’s commercial climate could get even tougher for businesses. And their staff will know this.
If you have staff working for your business, they may become concerned about the security of their job in today’s uncertain industrial landscape. This could make them anxious, and distract them from doing their jobs properly. It could certainly affect their productivity if they perceive that there’s a real threat to their employment.
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5. Inability to Meet Financial Obligations
Companies have taken out loans on projections that they would earn enough to settle those loans in the near future. But those projections didn’t factor in a novel global pandemic—there was probably no such thing when the calculations were being done.
Businesses in this situation now have to figure out ways to meet those obligations. They may also have to think about other financial concerns, including paying workers’ salaries, settling payments owed to vendors, and covering general fixed costs.
6. Cash Flow Problems
When businesses are unable to make sales, they may become short of cash. It’s also possible that lenders will become more stringent with their lending conditions because they too want to minimize their exposure to the commercial risks arising from the coronavirus pandemic.
How Small Businesses Can Mitigate The Effects of the Disruption
Here are a few ways small businesses can reduce the impact of the disruption on their businesses.
Only spend money if it’s really necessary.
Take these cost-cutting measures.
- If you can, begin saving for a possible widespread lockdown, or a significant slowdown in sales (call this a buffer fund)
- Implement or expand delivery service capacities to keep sales going
- Leverage the situation. Demonstrate that your organization is socially responsible by encouraging customers and the wider public to adopt appropriate safety measures.
- Implement remote working for employees, if you can.
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