Business Times Poll on the impact of COVID-19 on businesses

The Business Times recently conducted a poll with the intention of understanding the overall impact of COVID-19 on Sri Lankan businesses as well as how this impact varied for the two outbreaks and lockdowns.

The online poll drew responses from 65 respondents and the responses were received between 9^th and 14^th November 2020. The poll consisted of 10 questions in total, of which 7 were close-ended multiple choice questions while 3 questions were open-ended.

• Question 1: What is the scale of your business?

• 63 responded to this question in total. Approximately two thirds or 65% of the respondents fell into the categories of either small or micro scale businesses.
• 18 respondents (29%) were Micro scale businesses (with annual turnover of less than Rs. 15 million)
• 23 respondents (37%) were Small scale businesses (with annual turnover of between Rs. 16 and Rs. 250 million)
• 10 respondents (16%) were Medium scale businesses (with annual turnover of between Rs. 251 and Rs. 750 million)
• 12 respondents (19%) were Large scale businesses (with annual turnover of greater than Rs. 751 million)

• Question 2: What industry/sector do you operate in?
  • 64 responded to the question which had the options; Production/manufacturing, Agriculture & fisheries, Tourism, Retail, Banking, finance and insurance, Logistics, Other services and Diversified. The category Other Services was the single largest category in terms of the sectors that the respondents operated in. A third of the businesses (21 businesses or 33% of the respondents) fell into this category.
  • The full sector-wise representation of the respondents are as follows;
    • Production/manufacturing = 13 (20%)
    • Agriculture & fisheries = 5 (8%)
    • Tourism = 7 (11%)
    • Retail = 3 (5%)
    • Banking, finance and insurance = 5 (8%)
    • Logistics = 0
    • Other services = 21 (33%)
    • Diversified = 10 (16%)
  • Considering all services (tourism, retail, banking, finance and insurance and other services) together, the breakdown of the respondents in terms of sectors are;
    • Production/manufacturing = 13 (20%)
    • Agriculture & fisheries = 5 (8%)
    • Services = 36 (56%)
    • Diversified = 10 (16%)
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  • • Question 3: In which province does your business operate in mostly?
      • 64 responded to the question which had the options; Western Province, Central Province, Southern Province, Other and Many Provinces/Island-wide.
      • An over whelming majority of more than two thirds of the businesses (69%) operated primarily in the Western Province.
      • The full geography-wise representation of the business operations of the respondents are as follows;
        • Western Province = 44 (69%)
        • Central Province = 1 (2%)
        • Southern Province = 0
        • Other = 4 (6%)
        • Many provinces/island-wide = 15 (23%)

• Question 4: So far, how would you classify the impact of the current covid-19 wave (and lockdown) on your business compared with the first wave?
  • 64 responded to the question which had the options; significantly worse impact than the first, somewhat worse impact than the first, the impact of the current and first wave has been about equal, somewhat less impact than the first, significantly less impact than the first and uncertain about the comparison/it is difficult compare the impact of the two waves and lockdowns.
  • The most common response (chosen by 22% or by nearly a quarter of the respondents) was ‘significantly worse impact than the first’. 38% of the respondents selected options indicating that the second wave and lockdown had a greater negative impact than the first. In contrast, less respondents (35%) selected options which indicated that the second wave and lockdown had less of an impact than the first. Hence, overall, the perceived negative impact of the second wave and lockdown is greater, which is interesting, especially given that both the duration and the scale of the second lockdown was likely to be less than the first.
  • The full range of responses are as follows;
    • Significantly worse impact than the first = 14 (22%)
    • Somewhat worse impact than the first = 10 (16%)
    • The impact of the current and first wave has been about equal = 13 (20%)
    • Somewhat less impact than the first = 12 (19%)
    • Significantly less impact than the first = 10 (16%)
    • Uncertain about the comparison/ It is difficult compare the impact of the two waves and lockdowns = 5 (8%)

• Question 5: After the initial covid-19 outbreak and lockdown did you take any significant steps to mitigate the impact of future outbreaks and lockdowns?
  • 63 responded to this question with approximately half of the respondents indicating that they had taken significant steps to mitigate the impact of potential future covid-19 outbreaks while the other half of the respondents had not taken such measures due to various reasons. Most of the respondents who had not taken mitigation measures have behaved in this manner due to the inability to take mitigation measures (more than half the respondents who had not taken any mitigation measures had selected this option as their response).
  • The full range of responses are as follows;
    • No – the nature of my business doesn’t allow such mitigation measures = 18 (29%)
    • No – I didn’t have the financial and other required resources to take such measures = 11 (17%)
    • No – I felt that the impact would be mostly temporary = 4 (6%)
    • Yes = 30 (48%)

• Question 6: If you did take any such steps, how effective were they?
  • 58 responded to this question with the most common answer being that the businesses did not take any mitigation measures.
  • Interestingly, out of the 40 respondents who had taken mitigation measures, a majority (27 respondents or nearly 68% of the total who had taken mitigation measures) felt that these measures had some degree of success. Only a quarter of those who had taken measures (10 of the total of 40 respondents who had taken some measures) felt that mitigation measures had been ineffective.
  • The full range of answers are as given below;
    • Very ineffective = 4 (7%)
    • Somewhat ineffective = 6 (10%)
    • Neither effective nor ineffective = 3 (5%)
    • Somewhat effective = 15 (26%)
    • Very effective = 12 (21%)
    • Did not take any such steps = 18 (31%)
  • Cross-referencing the answers to this question against the scale of the business indicates a possible positive relationship between the size of the business and its ability to take effective mitigation measures against covid-19 outbreaks. 60% of the large businesses who responded had stated that their responses to potential future covid-19 outbreaks have been very effective. However, the corresponding figure is only 22% for medium scale businesses, 19% for small scale businesses and zero percent for micro scale businesses. Similarly, as per the answers to this question, while all large businesses which had responded had taken some measures to mitigate the impact of covid-19 outbreaks, 22% of medium businesses, 33% of small businesses and nearly half (or 47%) of micro businesses had not taken any such mitigation measures. This perhaps implies that covid-19 can further increasing existing disparities.

• Question 7: Overall, thus far, how would you categorize the impact of covid-19 and lockdowns (both first and second) on your business?
  • 64 responded to this question with the most common answer being ‘Extremely negative – lost significant revenue and had to let go of and/or significantly reduce the salaries of most staff’. 86% of respondents (55 respondents) indicated that they had been either extremely or moderately negatively impacted by covid-19 outbreaks and lockdowns – in terms of losing revenue and having to let go of and/or having to significantly slash the salaries of staff.
  • The full range of responses are given below;
    • Extremely negative – lost significant revenue and had to let go of and/or significantly reduce the salaries of most staff = 28 (44%)
    • Moderately negative – lost some revenue and had to let go of and/or somewhat reduce the salaries of some staff = 27 (42%)
    • Neither negative nor positive – no significant impact on revenue or staff = 8 (13%)
    • Somewhat positive – increased revenue to some extent = 1 (2%)
    • Very positive – increased revenue significantly and hired additional staff = 0
  • Cross-referencing the responses to the question with the size of the business again indicates the likelihood of Covid-19 further increasing existing disparities. For instance, while only 8% of large businesses had indicated the impact of the first and second covid-19 outbreaks and lockdowns to be extremely negative, this is far higher for businesses of lesser scale; 42% among medium scale businesses, 92% among small businesses and 83% among micro businesses.

• Question 8: How/in what way did the two Covid-19 outbreaks and lockdowns affect your business up to now?
  • Responses were provided by 60 respondents and these responses were grouped as follows; inability to meet expenses (staff, overheads, debt etc.), inability to operate (lack of inputs, logistics and staff issues etc.), loss of revenue, markets and reduction of growth and the responses which did not fall under these 3 categories were classified as other.
  • 72% of the responses provided related primarily to loss of revenue, markets and reduction of growth.
  • Some of the companies which were affected drastically had indicated that revenues have either fallen to almost zero or by around 75% to 80%, indicating the severe impact of covid-19 on businesses.
  • However, some companies had noted that they were able to perform better than their competitors given that they were making greater use of technology, which enabled them to survive through the pandemic induced lockdowns etc.
  • The full range of responses, after classification/categorization, are as follows;
    • Inability to meet expenses (staff, overheads, debt etc.) = 4 (7%)
    • Inability to operate (lack of inputs, logistics and staff issues etc.) = 5 (8%)
    • Loss of revenue, markets and reduction of growth = 43 (72%)
    • Other = 8 (13%)
  • Considering the scale/size of the business, while loss of revenue, markets and reduction of growth was the primary source of impact for businesses of all sizes, it appears to be more of an issue for businesses of relatively smaller scale. Only 58% of larger businesses had their primary source of impact relating to loss of revenue, markets and reduction of growth but the corresponding figure was much higher for small businesses – it was 90% for medium scale businesses, 70% for small businesses and 72% for micro businesses.

• Question 9: What is the biggest future concern for your business, following the Covid-19 outbreak (e.g. inability to meet expenses such as staff salaries, lack of sales etc.)?
  • Responses were provided by 57 respondents. These responses were grouped as follows; fear of closure of business, inability to meet commitments (debt, staff salaries etc.) and working capital issues, lack of orders, sales & revenue, macroeconomic and industry impact and business sentiment/environment and the responses which did not fall under these 4 categories were classified as other.
  • The full range of responses, following the above categorization, were as follows;
    • Fear of closure of business = 6 (11%)
    • Inability to meet commitments (debt, staff salaries etc.) and working capital issues = 16 (28%)
    • Lack of orders, sales & revenue = 15 (26%)
    • Macroeconomic and industry impact and business sentiment/environment = 11 (19%)
    • Other = 9 (16%)
  • In terms of future concerns, the biggest concerns appeared to be relating to the inability to meet commitments (debt, staff salaries etc.) and working capital issues. The concerns were mainly regarding ability to pay staff, loans, having sufficient working capital to operate etc.
  • Decline in sales was the next most expressed concern. Concerns were expressed due to disruptions to export markets, inability for local customers to access outlets etc.
  • With regard to macroeconomic and industry impact and business sentiment/environment, the concerns were regarding the impact of the country’s economic growth trajectory, halting of economic activity, uncertainty impacting on business decisions etc.
  • The businesses which feared closure were concerned that their respective companies would collapse as a result of the negative impact stemming from covid-19 outbreaks and lockdowns.
  • Barriers to operations (including raw material imports, access to supply chains), higher cost of operating in and adapting to the new normal were among the other concerns expressed by businesses.
  • The responses varied significantly for this question depending on the size/scale of the business. The primary future concern of large businesses (selected by 45% of large businesses) was the lack of orders, sales & revenue. Macroeconomic and industry impact and business sentiment/environment was the primary future concern for medium-scale businesses (selected by 56% of medium-scale businesses) while for small businesses it was the inability to meet commitments and working capital issues (selected by 35% of small businesses). For micro businesses, inability to meet commitments and lack of orders, sales & revenue were ranked equally as the primary future concern – with 29% of respondents choosing each of the two options.

• Question 10: What kind of assistance/support do you feel you would need to get your business up-and-running after the lockdown?
  • Responses were provided by 57 respondents. These responses were grouped as follows; access to imports/raw material, financial support (subsidies, grants, tax concessions etc.) and working capital support, health-related (vaccines etc.), marketing support and embracing digital technology and the responses which did not fall under these 4 categories were classified as other.
  • The full range of responses, following the above categorization, were as follows;
    • Access to imports/raw material = 2 (4%)
    • Financial support (subsidies, grants, tax concessions etc.) and working capital support = 34 (60%)
    • Health-related (vaccines etc.) = 8 (14%)
    • Marketing support and embracing digital technology = 3 (5%)
    • Other = 10 (18%)
  • Many respondents had highlighted the need for concessionary and long-term loans and working capital support, as well for tax cuts, subsidies etc. Requests included longer grace periods for loans, access to funding at concessionary rates etc.
  • Some respondents had also highlighted the importance of functioning effectively in the normal – including providing knowledge to businesses on how they can recover quickly, educating the public on the need to keep the economy going despite the pandemic, clear guidelines on how businesses can operate etc.
  • Regarding health concerns, the responses included providing a vaccine for covid-19, ensuring availability of necessary medical supplies etc.
  • Considering the scale of the business, financial and working capital support was the primary need for businesses of all sizes, although the significance of this varied depending on the scale of the business. In the case of large businesses, 36% chose this as the key form of support required, while the corresponding figures for the businesses of other sizes were; for medium 67%, for small 75% and for micro 53%.