Global Economic Meltdown Affects Small Scale Business Research Paper

Effect of Global Economic Meltdown to Small Scale Businesses
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September 18, 2020
Understanding the effects of economic meltdowns on the local and small-scale businesses is important for any business manager. It allows him to be able to mitigate the effects of large-scale downturns by adapting his management strategy. Accordingly, this article would focus on the understanding of the effects of global economic meltdowns (GEMs) to small-scale businesses. This includes the difficulties that such businesses experience when it comes to procurement of supplies, manning of operations, and producing enough demand, among others. All in all, the author believes that the reason why several small-scale businesses have closed during the pandemic was because of their vulnerability amidst the effects of the crisis.
Global Economic Meltdowns
The current economic shutdown that was caused by the Covid19 Pandemic is perhaps one of the best examples of the effects of GEMs to small scale businesses. In one study conducted by Bartik, et al. (2020), the authors noted that in the United States, around 41.3% of small-scale businesses that they have surveyed have temporarily closed during the pandemic. Accordingly, around 1.8% of the same population have permanently closed due to severe business losses, incapacity to maintain operations, and lack of consumer demand, among others. In another study conducted by Long (2020), estimates on permanent closures of small-scale businesses have reached up to 100,000 throughout the whole United States.
Impacts of GEMs
As stated earlier, some of the most dominant impacts of GEMs upon small-scale businesses are; (1) severe business losses, (2) incapacity to maintain operations and (3) lack of consumer demands. The subsequent sections will discuss each of these in detail.
Severe Business Losses
The current GEM has indeed led to severe business losses for every type of business. In one article written by Dua et al. (2020), some of the small-scale businesses that are mostly affected by the current GEM are those which engage in “accommodations, food service, and educational services”. In fact, just by the end of 2019, a study conducted by the Federal Reserve has shown that only 35% of the small-scale businesses in the US have healthy financial status. Accordingly, even though all businesses are af...