Challenges Faced by Small Businesses Due to COVID-19


By Megan Bortner, SBDC Lead Consultant
Managing Partner, Labyrinth Digital

With the end of the COVID-19 pandemic and its associated precautions nowhere in sight, small businesses must pivot to see the pandemic as a long-term structural challenge instead of a short-term crisis. Ongoing structural challenges require more than temporary solutions, and small businesses should work to develop sustainable practices, actively find new growth opportunities, and rely on newly available resources.

Fortunately, the pandemic has presented challenges to virtually all industries, meaning that there are robust new tools created specifically to overcome these challenges.

eCommerce Outpaces Traditional Retail

The Challenge: eCommerce has seen its highest market penetration ever in 2020, with $1 in $5 now being spent online. While eCommerce has been steadily gaining market share, the pandemic has catalysed this shift. Small businesses need to quickly adapt by using digital channels.

Sustainable Practices: Use this opportunity to set up long-term communication and marketing channels with customers. The small businesses that capitalize on new digital habits will be those which use their internet presence as a new storefront instead of a stop-gap. Moreover, the uncertainty of the pandemic has created a grace period where customers expect changes and desire information. Omni-channel marketing is important both to control of the conversation in this window and to create lifelong clients. It can also generate new business using insights mined from digital data.

Growth Opportunities: Concerts and conferences might be cancelled for the foreseeable future, but event-based industries can still find ways of generating income by going digital. The pandemic has created an explosion of internet resources and methods for doing business that used to only be done in-person. Musicians unable to tour, for instance, have found successful revenue pools by live-streaming concerts and selling related merchandise. Meanwhile, travel companies have heightened their digital presence by revamping their websites, investing in PR and running virtual travel experiences. These are specific solutions to niche industries, but small businesses of all shapes can reach their customers in new ways by using internet tools and monetize that interaction.

New Resources: New partnerships are available to assist with digital migrations, both in from the public and private sector. In a bid for the loyalty of new brands, technology companies like Google are outpouring free resources, guides, and tutorials to bridge the knowledge gap and help traditional industries go digital. Likewise, federal, state, and even city dollars have been earmarked for COVID-19 relief, including projects that are transitioning online to survive.

Credit Crunches and Slim Profit Margins

The Challenge: slow sales have made it difficult for small businesses to meet their obligations for rent and wages, even as access to credit is limited by tightened financial markets.

Sustainable Practices: Look hard at the budget for innovative places to trim the fat. Traditionally, this means minimizing extra expenses like travel and delaying purchases, but savings can be also found using creative approaches. Renegotiate insurance, utility bills and subscription, re-examine tax structures, and consider refinancing options.

Growth Opportunities: Rethink revenue streams. A lag in traditional income sources could be the catalyst to make overdue adjustments. Survey the market to meet new customers and adapt to new purchasing habits, and check-in with old customers to see if you can adapt to meet their new COVID-19 needs.

New Resources: Corporations, foundations, banks, and the government have all developed programs to help small business access financial relief in the form of loans or grants. Spend time looking local resources specifically tailored to your industry. For example, Colorado has a Work-Share program which splits the unemployment cost of reducing staff hours, and the Office of Economic Development has compiled a database of state-specific resources.

Unpredictable Supply Chains

The Challenge: quarantine and changed consumption patterns have caused supply problems. Some products have seen unprecedented success, such as disinfectants and producers of baking supplies, and but this success has led to problems judging the proper levels of manufacture and distribution. Less fortunately, small businesses that depend on complex logistics overseas have experienced delays or shutdowns, wreaking havoc on pricing, customer service and bottom lines.

Sustainable Practices: Irregular supply chains have caused producers large and small to see the need for greater internal visibility and communication. Like a package travelling through the mail is followed at each stage with the scan of its unique tracking number, manufacturers are pushing for each part to be labelled and each piece of the processes timed more precisely. Currently, many links in the logistical chain exist in messaging silos, which has the real-world impact of causing communication slowdowns any time there is an unforeseen adjustment. Identifying all of these logistical silos establishing agile communication chains between them is the first step towards a long-term increase in visibility, enabling better prediction and clearer customer messaging.

Growth Opportunities: Changes in customer behaviour create an opportunity to introduce new products. The COVID-19 outbreaks in meat processing plants and subsequent price hike has encouraged the use of plant-based substitutes. While this has spiked big producers like Beyond Meat and Impossible Foods, small businesses can similarly pivo to better use available resources. Restaurants, for instance, can promote new menu items to understanding customers. Similarly, as quarantine has changed demand in the fashion industry, small clothing boutique can follow this trend by changing the types of products feature. In other words, the pandemic has caused customers to adapt as well as businesses, and these periods of changing consumer taste are periods when brands can create life-long relationships.

New Resources: When unforeseen bubbles in the supply chain create problems for small businesses, a good response is to shop around for new deals. Businesses big and small are competing for new clients, and they might be offering pandemic sign-on specials that beat out current prices. Likewise, old suppliers have likely also had to adjust and might be open to renegotiating deals to mutual gain.


The COVID-19 pandemic is undeniably a challenge for all small businesses. However, the global nature of this challenge has one upside: producers and consumers are scrambling alike. The small businesses which successfully overcome the challenges will be those who plan for their long-term future and use available resources and opportunities to come out ahead.

  • Make long-term adjustments, not short-term fixes
  • Consult free public resources for information and financial help
  • Renegotiate deals with suppliers
  • Cost-cut using innovative strategies
  • Visualize and smooth out links in the supply chain
  • Pursue new revenue streams in the digital space
  • Consider product substitutes
  • Follow changing trends in consumer taste
  • Communicate clearly with customers and employees

About the Author:

Megan Bortner, North Metro SBDC Lead Consultant
Managing partner, Labyrinth Digital  

Megan has over 10 years of experience in marketing strategy consulting, digital marketing, and analytics. She started her career consulting for Fortune 500 businesses which taught her best-in-class methodologies that she now applies to small businesses. Megan understands the challenges of starting and running a business, as she herself co-founded a small consultancy. Megan is classically trained in business and holds her MBA from Purdue University.


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