The impact of COVID- 19 on Entrepreneurship Globally

The Covid- 19 pandemic started in late December 2019, and since then it has significantly affected the world’s economy and various sectors of life. Due to lockdowns and social distancing preventive measures taken to limit the virus transmission, there was a significant disruption at different levels, socially and economically to businesses worldwide, of which small scale businesses and start-ups were among the most vulnerable. Many businesses were even compelled to lay off their full time employees, but on the bright side there was an increase in entrepreneurial activity and creative approach to tackle the crisis.  

Without a doubt, the pandemic has greatly affected all kinds of businesses. Many entrepreneur and start-ups faced a major reduction in revenue due to the impact on the global supply and demand of both goods and services. In the future, these changes might negatively affect and discourage new entrepreneurs or as some suggest that it might have a positive impact, and can be a learning opportunity to create new business ideas and strategies to better cope with the post Covid world. Many economies such as the one in China, have established programmes to encourage entrepreneurship and facilitate them. The pandemic has posed a great threat to the established system so in order to cope with the downturn in the economy, maintaining economic competitiveness among countries is crucial. Governmental support is essential for all industries despite the scale, especially in the time of crisis. Many governments have taken necessary steps to support local business enterprises, government like that of the United Kingdom, South Korea has initiated to provide funds and relief packages for entrepreneurs.

In countries with greater number of cases, borders were sealed to avoid transmission of the virus, and massive lockdowns were imposed in Italy, California, New York and UK. Further efforts were made to adopt social distancing, thus many businesses around the world were compelled to shut down and restrict their interactions, leading to significant loss in the economy. Partial or complete border closure also affected the circulation of goods in the global supply chains. In countries with higher number of cases like the USA and Europe, the impact was more intense, in less than 3 months these countries had faced a major crisis leading to a global recession. 

Since the commerce community is usually connected worldwide, when they were unable to communicate with vendors, it was a serious issue to business who had their supply chain linked to China. China has the biggest market for industrial goods due to its cost-effectiveness, not only small business owner faced challenges, but there were regulatory and legal challenges to the large scale industries as well. Electronics industry, automobiles industry in countries like Korea, Taiwan etc were impacted as they depend on China for importing electronic goods. Some IT companies experienced hike in revenue amidst the pandemic, video communication applications like Zoom was amongst the most downloaded application in the USA in the 2nd week of March 2020. Online platforms such as Tiktok, Instagram, Facebook also experienced significant increase in traffic and revenue.

During Covid-19, 41% of start-ups fell in the red zone and barely had the resources to sustain for three months. Many small-scale entrepreneurs were compelled to close their business leading to global fallout in small scale entrepreneurship. These small scale businesses play a vital role in the local economies by providing employment to individuals and much needed goods and services. Approximately more than 70% of the new start-up had to end contracts with their full- time employees since the emergence of the virus. Among the top three continents, North America showed the greatest reduction in employees followed by Europe and Asia. To help aid young entrepreneurs in growing business, global initiatives like the SOS meeting and rapid recovery programs were initiated, which is capable of supporting over 200,000 businesses in 32 countries. The International Monetary Funds has announced it will provide additional to poorer countries by giving grants and debt relief. But such efforts cannot save certain businesses and industries from incurring the losses from the pandemic.

They say necessity is the mother of invention, and so far we’ve seen incredible approaches taken by organizations to transform their operations to fit with our new way of life. We should recognise the new needs of the community and generate services and goods that complement the new normal. We are all aware that when we get to the post Covid world things will be different. More than ever before, the business world will need to think about this change and act accordingly. The pandemic could be an opportunity to re-direct and re-purpose the existing business. Throughout the decades, there are stories of entrepreneurs and tech companies launching during a downturn and soaring to success. The global pandemic we are currently facing is unprecedented; however entrepreneurs are expected to rise to these challenges now more than ever.