Essential Business: The Impact of COVID-19 on SME's

Community 4 min read

12 May 2020

As the COVID-19 lockdown continues, many of us are still trying to get to grips with this “new” normal, but it’s the old normal many Irish Small to Medium Businesses (SME's) are hoping we all go back to. Many SME's are temporarily closed due to the Government enforced lockdown while essential ones to the economy like credit unions, supermarkets, delivery companies, and others remain open. But while essential services are open, many of them are still feeling drastic effects on their business.

We recently interviewed Sean Jameson, the Managing Director of an essential service operator - Southway Couriers, a haulage and transport company based in Co. Cork and Co. Kerry. We asked Sean about the local and national impact of COVID-19 restrictions on their business, the general industry, and the SME sector:

What has been the impact of the COVID-19 pandemic on your business so far?

"It has certainly focused the senses. The landscape has dramatically changed from the start of the year, since the beginning of this covid-19 pandemic, and the introduction of restrictions. The drop in economic output, along with the increase in uncertainty has made it a challenging time to do business. The biggest effect on us has been the inevitable drop in turnover due to the restrictions on people and business. Such a drop has caused us to review our plans and goals for the year. We were in a position to upgrade our fleet to allow expansion of our services, however this process has been put on ice for a while.

The opportunities that were available before the pandemic seem to be just out of reach for a while longer. At this juncture, we've moved into a phase of survival and not terminal decline. Therefore, I think it's important to take stock while we have the time, and to use the break wisely so we can come back stronger when the pandemic is a distant memory."
 

Since restrictions have come in, as an essential business what is the environment like out there?

"Well, as a transport and haulage firm, our business is categorised as essential to allow the consistent flow of the most basic goods and services to keep the country going. The excellent jobs being carried out by all regions essential frontline employees, is something we as a nation should be very proud of.

However essential doesn’t necessarily mean busy. People think that because you are an essential business, you must be doing alright, the reality is we're struggling as much as everyone else. The introduction of restrictions has introduced both fear and caution to the marketplace and really constricted business to business transactions. A huge portion of the business community are categorised as non-essential and are temporarily closed, this effectively means they no longer need the services of those businesses that are essential. As you can imagine, this has resulted in a sharp decrease in trade for both us and others.

The knock on from this is a reduction in volume from the businesses still operating making it more difficult to maintain economies of scale. Other haulage firms have told me how they're often running half empty trucks across the country."
 

How has business operations day to day changed since the onset of the virus and restrictions?

"We feel very lucky that thus far we have been able to continue trading. While we'd considered completely closing during the pandemic, we felt it would've had an unnecessary impact on our customer base that depend on our service.

To continue operations, we've had to make some changes to day to day running of the business regarding health and safety and operating capacity. We looked at what we could do to make our staff, customers and general public as safe as possible. From a practical standpoint we’ve supplied our staff with sanitising equipment for our vehicles, but more importantly we have instructed drivers to keep maximum social distance between themselves, the general public, and the customers keeping interactions to a minimum. This sadly, does create a kind of cold and distant way of doing business and you do miss the social aspect of chatting with customers.

We also had to stop handling paperwork and stay in our vehicles during deliveries or collections where possible. The other and most impactful change we've implemented, is to reduce capacity to match demand. We have had to drop capacity by 60% to ensure our service is still economic to customers. We strive to operate a reliable and value for money service and will continue to do so going forward."

Has the crisis personally affected you in any way?

"The biggest impact the pandemic has had on me personally is just the change in the pace of life. In the words of Ferris Bueller “life moves pretty fast if you don’t stop and look around once in a while you could miss it” (one of the many films I've had time to watch since the crisis began) and this is certainly true in times of full operation. So, for me personally I feel very lucky to get the time to myself and grateful that none of my friends or family have been affected by the virus so far. "

What do you envision the rest of the year and into next year being like for your business and the Irish SME sector in general?

"I can see a tough year for SME's. It's difficult to see the economy recovering quickly after the Covid-19 in the short-term. With the central bank predicting a fall in GDP of 8.3%, I feel it would be difficult to persuade investors to back projects.

In areas such as my native County Kerry, the local economy is heavily reliant on tourism and the effects of the covid-19 crisis could be long lasting. The collapse of the tourist season along with restrictions introduced to limit social contact has resulted in many direct and indirect job losses, coupled with the uncertainty for booking breaks for even next year, acts as a perfect storm on a massive portion of the area's economy.

While the year is going to be difficult for all concerned I would still hope that business can rebound next year. I would be cautiously optimistic about the future of the SME sector which still has many wounds from the previous financial crisis."

Do feel the SME sector are being given enough support by the Government after the imposition of the lockdown

"I feel there is a balancing act at government level to support business but do so at the right time. The effort the whole country made so far has been great. I feel that however much the government try to help small business through this period, its only when the economy is reopening you will only really see how much these businesses need support.

It's easy to imagine that the reopening phase for many businesses is going to be every bit as difficult if not more difficult then shutting in the first place. The balancing act between safely opening and profitably opening is going to be a mega task for every business owner. At that stage the government may need to introduce supports to get businesses through this difficult stage."

If your business is feeling the financial impact from COVID-19, your local credit union may be able to help. Many credit unions have dedicated business and SME loans and are still lending. Or if you have been affected personally, then a personal loan may be able to help.