Thursday, July 16, 2020

The Impact of Coronavirus on Small Business – Parliament Optical

There used to be a time when small business owner’s principal worries were about securing investments, attracting customers, advertising, and most importantly the survival of their business. According to a report titled Canadian New Firms: Birth and Survival Rates over the Period 2002-2014, May 2018 by the Canadian Government, the survival rate for small businesses within the first five years is 63% and after ten years that number drops down to 43% so it is no wonder that creating and operating a small business is a risky venture. However, when a small business does manage to be successful it can be a great accomplishment.

Sadly, the emergence of Covid-19 in 2020 has created a new and even bigger challenge for small business owners. Take for instance the Parliament Street Optical.  The Parliament Street Optical is located on the east side of Parliament Street, between Carlton and Gerrard Street. The business is owned by Munaverali Gulamhusein.

Unlike big businesses who regularly generate high profit margins, for small businesses like the Parliament Street Optical, it can be a struggle to stay afloat even in the best of times. Still the small businesses that were enjoying steady profits before Covid-19 are now seeing a steady decline in customers, and in some cases have even had to shut down under government public safety orders. On March 17th the Ontario Government announced a state of emergency and later required non-essential businesses such as, clothing stores, bars, and restaurants to shut down. This has led to much uncertainty for business owners who are left wondering when they will be able to open again, and when they do if they be able to expect the same profit they were generating pre-Covid-19. 

As Canada enters its fourth month of dealing with the pandemic, we are slowly able to see the effect closures have had on, not just small businesses, but big ones as well. According to Statistics Canada 32% big businesses, with 500 or more employees, have reported a decline in profits of around 20% when comparing the same 2019 and 2020 business quarter. Comparatively 60% of small businesses with 1-4 employees and 56% of small business with 5-19 employees report a similar 20% drop in revenue.

So why is it that a higher rate of small businesses are being impacted by the pandemic then their bigger business counterparts? Well for one thing the majority of small businesses, 79% according to a report titled Key Small Business Statistics by the Canadian Government, are in the service industry. Unfortunately, this industry has been particularly hard hit as many of these businesses have been categorized as non-essential by the Ontario Provincial Government and have thus been required to shut their doors during phase 1 of the lockdown measures. Another reason many point to is the ability of businesses to conduct business online so they could keep customers during the lockdown. For many small business owners, like the Parliament Optical, whether because of the type of industry they are in or because of a lack of financial and human resources, they are unable to transfer their operations online through delivery or even curb side pick-up, both of which have become new methods of service during the pandemic. In contrast most big businesses are normally run both online and in person, making it easy for them to carry on business as usual.

Parliament Optical is an owner run business that provides walk-in services to customers looking to conduct eye examinations and purchase prescription optical glasses and frames. Since closing its doors on March 22 due to the Covid pandemic, owner Munaverali Gulamhusein has had no revenues to support his business. Gulamhusein did receive a $40,000 interest free business loan from the Canadian government - $10,000 of which he is not required to pay back, and which he is thank for. However, he is reluctant to use the bulk of loan due to the hardship and uncertainty of his ability to pay it back. For Gulamhusein, he is taking it one day at a time and operating as if it was 2018 and he was just starting the business.  This was a time when he had no funds and taken a line of credit. Instead of paying himself from his business he is living on the support provided by CERB (Canadian Emergency Response Benefit) which most out-of-work individuals get. Gulamhusein has been able to obtain 3 months of rebates on his phone and internet which has helped keep expenses down but was unable to obtain rebates from his business insurance or alarm company.  Finally, Gulamhusein is relying on his landlord’s acceptance of the government’s upcoming emergency rent subsidies to sustain his business through the closure. He is also counting on the loyalty and trust of his customers when he re-opens.

The negative impact of Covid-19 on small businesses can be seen in and around Toronto, including on local businesses in the Regent Park community. However, as Toronto enters stage 2 of the recovery effort\ts small business can begin to slowly open. Hopefully they will find their loyal customers ready to greet them albeit from a two meter distance and wearing a mask. Nevertheless, any optimism must be tempered with caution as Toronto and the rest of Canada is not out of the wood works of this ghastly pandemic yet.

To see the interview with Munaverali Gulamhusein of Parliament Optical click here.

By Adaku Huggins-Warner
Adaku is a volunteer with the FOCUS Media Arts Centre.

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