Case-Study of a Female Entrepreneur in Canada


Overcoming Challenges Faced by Small Businesses During the COVID-19 Pandemic

The COVID-19 pandemic was not only a threat to public health, but it also affected all types of businesses worldwide. A survey of 132 small businesses in 132 countries by the International Trade Center in 2020 revealed that one fifth of these businesses were at risk of permanently shutting down when the pandemic first started (1).

Small businesses were among the most affected in Canada, making up 98% of all the employers in the country and 64% of the Canadian labor force (2, 3). A survey of 10 000 owners of small businesses worldwide, carried out by Goldman Sachs in 2020, showed that 96% of the interviewees were affected negatively by COVID-19, and 51% declared that their business was unable to survive an economic shut-down of 3 months (4). This study also revealed that 65% of these small businesses had difficulties in getting access to emergency funds and 53% of the survey respondents demonstrated that their employees do not have the ability to work from home using the internet (5). Moreover, with in-person activities that needed to be avoided and an increase in online platforms and services, businesses had to face new challenges and a new way to organize their work.

This article will be identifying two key needs or issues faced by small businesses during the pandemic using the field study by the Think Tank AlterContacts (6). The field study covers cases of 350 small businesses in 41 countries interviewed from May 2020 until July 2021. In this article, we will look at the experience of Malak Sharaf, a small business owner in Canada and the founder of Malak Sharaf Movement, a platform that offers both online and face-to-face yoga, Pilates, and barre lessons (6). In addition, the article will feature a call to action for governments and institutions to implement policy changes and will illustrate how international organizations can assist small businesses in facing these challenges.

Brand Exposure and Customer Retention Online

The pandemic has forced a lot of businesses to transfer their in-person services to using digital platforms. For Malak Sharaf, the first challenge identified was the need for assistance with online customer retention and brand exposure (6). Malak mentioned that it has been challenging to attract clients to her online business even with the help of a marketing company. Her case is not unique. A survey of small businesses in Canada revealed that 44% had issues using technology and receiving technological support in specific areas including e-commerce, digital marketing, and improving their websites (7).

The COVID-19 pandemic can be an opportunity for small businesses to become stronger online. However, it takes a lot of effort and time to engage and retain customers in the virtual world (8). Solutions by business owners, national government, and international organizations need to consider operational business costs and prioritize them over the benefits of increasing an online clientele for small businesses.

The Call: Increase the Use of Digital Platforms and Website Analytics

Digitalization is occurring at high speed and there are issues that need to be addressed by policymakers, including the ability of businesses and individuals to adapt to it (9). The Canadian government has provided support for small businesses in response to the COVID-19 pandemic, for example with the Canada Emergency Response Benefit (10). However, additionally, it could provide targeted measures to make it easy for businesses to fully benefit from digitalization. For example, the government could offer financial support targeted to improve the transition of small businesses to digital operations, by providing for example digital marketing consultancy discount vouchers or E-commerce resources for small businesses, such as free courses on how to increase brand awareness online and reach many customers on social media platforms (11).

Governments should not only invest in financial capital to assist small businesses in overcoming challenges caused by the pandemic but also in building stronger social capital. In this context, social capital refers to online communities of followers and users (12). It is important for entrepreneurs to establish a robust online following by building trust and rapport with new and existing customers. The government needs to promote online marketing strategies that are low in cost, for example by using free platforms such as YouTube, to teach and train small business owners about building a strong online presence.

A practical and cost-effective way for small businesses to improve brand exposure and retain customers online is to increase website traffic and track customer trends online. Presence in the digital world is highly related to opportunities in marketing a business, and small businesses can use a free service like Google Analytics to track their progress on their websites (12). By tracking and analyzing activities on their websites, small businesses can identify high-performing posts, hence understand what exactly their customers like, and concentrate on those activities to keep their existing customers and attract new ones.

Pricing

In the interview, Malak Sharaf also pointed out her difficulty in being able to price her services according to her clients’ needs (6). Some of her clients were still employed, and some of them lost their jobs due to the COVID, making it hard to develop a single pricing approach that could satisfy everyone and ensure good services and revenues. During the pandemic in Canada in March 2020, 1 million jobs were lost and in April this increased to 1.8 million job losses (13). Pricing is a critical aspect for the survival of a business, and consumers consider the price of a product in relation to its quality (14).

There are different pricing strategies, for example, they could be profit-oriented or sales-oriented (14). It is crucial for small businesses to analyze their products and services to evaluate their profits, as well as to compare prices with competitors and review how their rates can be adjusted (8).

The Call: Pivot Your Business Model

Small businesses need to change their business models in order to cater to their clients’ specific needs, and the COVID-19 can provide good opportunities, especially for female entrepreneurs, to adjust towards a more efficient and sustainable system. For example, a cost-effective and sustainable idea for Malak would be to switch to an “à la carte” business model to make her prices more accessible to her clients. This is a pricing system where customers select product packages and hence obtain a price based on the combination that they have picked (15). This pricing model is particularly suited to meet every individual client’s needs, and customers only buy or use products they need or deem useful.

Policymakers need to make practical short- and long-term reforms in order to assist small businesses, especially women-led enterprises (16). Statistics show that women lost more jobs than men during the pandemic in Canada, and this highlights an ongoing “industrial segregation” between men and women in the Canadian labor force (3). Women entrepreneurs are often more exposed to market changes and events that negatively affect their activities like the COVID-19 pandemic, and there is a need for an agreed response to last beyond the current pandemic to support small entrepreneurs with the different aspects of running a business, such as cash management, pricing and keeping up with tax forms (16).

With a lot of businesses moving from face-to-face to online services and rising competition among them, the government should promote laws and regulations on pricing, advertising, and competition standards that can apply to this new market paradigm, and provide new and transparent ways for small businesses to run and thrive (16).

Conclusion

It is important to note that to overcome the challenges presented by this pandemic, there is no one solution that can be used to solve them all (8). Most businesses were not prepared for the pandemic, and local governments, international organizations, and small- and medium-sized businesses should all work together to find long-term, cost-effective and sustainable solutions to address the key needs of small businesses. In this regard, the field research carried out by the Think Tank AlterContacts on the impact of COVID-19 on small businesses worldwide with more than 350 respondents from 41 countries in 17 languages can be instrumental.

However, there is a silver lining. Research shows that women entrepreneurs saw opportunities to grow and improve their businesses during the pandemic by expanding their online services (15). In the interview, Malak Sharaf indicated that the pandemic has encouraged her to build her business online, and she is launching a new fitness program in the upcoming year (6). The pandemic is not over yet, and small businesses continue to adapt to the new reality and look for new ways of innovation.


Written by Mellissa Paida Musonza, a recent Health and Social Care and Management Policy graduate and she also has a degree in Psychology and Sociology. She is also a budding entrepreneur and is passionate about economic and social reform for small entrepreneurs.

Edited by Sara Pasqualetto

September 2021

In 2020 Think Tank AlterContacts launched the Lockdown Economy, an international non-profit grassroots social-economic and educational initiative to help small businesses and self-employed professionals overcome the challenges of the pandemic and reactivate the economy. It is registered by the United Nations as an Acceleration Action for SDG. From May 2020 until July 2021 we have been collecting insights from small business owners and self-employed professionals from different business sectors and countries to see how the COVID-19 pandemic affected their business, their life, and future. This article is based on the field research of the Lockdown Economy.

References

1 - OECD (2020). Tackling Coronavirus (COVID-19): Contributing to a Global Effort-Coronavirus (COVID-19):SME Responses, [online], pp5. Available at https://www.oecd.org/coronavirus/policy-responses/coronavirus-covid-19-sme-policy-responses-04440101/ [Accessed on 02/09/2021].

2 - Tam, S., Sood, S. and Johnston. C. (2021). Statistics Canada. Data to Insights for a Better Canada: Impact of COVID-19 ON Small Businesses in Canada, Second Quarter of 2021, [online], pp3. Available at https://www150.statcan.gc.ca/n1/pub/45-28-0001/2021001/article/00022-eng.htm [Accessed on 30/08/2021].

3 - Government of Canada (2020). Economic and Fiscal Snapshot 2020. Available at https://www.canada.ca/en/department-finance/services/publications/economic-fiscal-snapshot.html [Accessed on 01/09/2021]

4 - Liguori, E.W. and Pittz, T.G. (2020). Strategies for Small Business: Surviving in the Era of COVID-19. Journal of the International Council for Small Businesses, [online] 1(2), pp.106-110. Available at https://www.tandfonline.com/doi/full/10.1080/26437015.2020.1779538 [Accessed 30/08/2021].

5 - Liguori, E.W. and Pittz, T.G. (2020). Strategies for Small Business: Surviving in the Era of COVID-19. Journal of the International Council for Small Businesses, [online] 1(2), pp.106-110. Available at https://www.tandfonline.com/doi/full/10.1080/26437015.2020.1779538 [Accessed 30/08/2021].

6 - Think Tank, AlterContacts, Lockdown Economy Initiative, Lockdown Economy Canada in Wellness and Movement with Malak Sharaf, [online]. Available at https://www.youtube.com/watch?v=Z_Js_BddY9o

7 - OECD (2020). Policy Responses to Coronavirus (COVID-19): Coronavirus (COVID-19): SME Policy Responses, [online]. Available at https://www.oecd.org/coronavirus/policy-responses/coronavirus-covid-19-sme-policy-responses-04440101/

8 - United Nations Industrial Development Organisation (2020). Responding to the COVID-19 Crisis: Pathway to Business Continuity and Recovery, Guidance to Micro, Small and Medium Enterprises (SME’s), [online]. Available at https://www.unido.org/news/new-publication-business-continuity-and-recovery-covid-19-crisis. [Accessed on 02/09/2020].

9 - UNCTAD (2020). E-Commerce and Digital Economy Programme: Year in Review 2020:Facilitating Inclusive Digital Economies in Challenging Times (online).Available at https://unctad.org/webflyer/e-commerce-and-digital-economy-programme-year-review-2020 [Accessed on 02/09/21].

10 - Government of Canada (2020). Economic and Fiscal Snapshot 2020. Available at https://www.canada.ca/en/department-finance/services/publications/economic-fiscal-snapshot.html. Accessed on 02/09/2021].

11 - OECD (2020). Policy Highlights: The Digital Transformation of SMEs. Available at https://www.oecd.org/industry/smes/PH-SME-Digitalisation-final.pdf. [Accessed on 02/09/21].

12 - Kromidha, E. and Robson, P.J.A. (2020). The Role of Digital and Investment Network Signals on the Internationalisation of Small Firms, (online). Available at https://journals.sagepub.com/doi/full/10.1177/0266242620958898 [Accessed on 02/09/2021].

13 - Global Entrepreneurship Monitor (2020). Diagnosing COVID-19 Impacts on Entrepreneurship: Exploring Policy Remedies for Recovery. Available at https://www.gemconsortium.org/reports/covid-impact-report [Accessed on 03/09/21].

14 - Cant, M.C., Wiid, J. and Sephapo, C.M. (2016). Key Factors Influencing Pricing Strategies for Small Business Enterprises (SMEs): Are they important?. Available at file:///C:/Users/user/Downloads/9820-Article%20Text-36489-2-10-20161108.pdf. [Accessed on 03/09/21].

15 - Manolova, T.S., Brush, C.G., Edelman, L.F. and Elam, A. (2020). Pivoting to Stay the Course: How Women Entrepreneurs Take Advantage of Opportunities Created by the COVID-19 Pandemic. Available at https://journals.sagepub.com/doi/full/10.1177/0266242620949136 . [Accessed on 03/09/2021].

16 - International Labour Organisation (2020). Policy Brief: Enabling Environment for Sustainable Enterprises and the Post Covid Rapid Response. Available at https://www.ilo.org/empent/Publications/WCMS_750320/lang--en/index.htm . [Accessed on 03/09/2021].