THE IMPACT OF COVID-19 PANDEMIC AMONG SMALL BUSINESS

ENTITIES

An Undergraduate Thesis Presented to the Faculty of

College of Business Administration Education
University of Mindanao
Davao City

In Partial Fulfillment of the Requirements for the Degree of

Bachelor of Science in Business Administration
Major in Financial Management

Alapan, Irah R.
Torres, Maricar Jade J.
Vertuoso, Brandon lou L.

February 2021
 Chapter 1

INTRODUCTION

Background of the Study

The outbreak of coronavirus disease-2019 (COVID-19) has truly affected the
businesses especially the small ones and those business that not necessities
during the pandemic. Many businesses closed due to lockdown implemented
by the government temporarily to anticipate the rise of covid 19 cases. The
greatest and most effect of the lockdown is to stop the business activities.
Lockdown was first reported in Sindh province from March 23, 2020. Karachi
—the capital city of Sindh province is considered as the country's largest
industrial zone accounted for 30% of total exports. Because of lockdown, out
of 2700 Factories in Karachi under 50 were operating on the first working day
(Hussain, 2020). It has been reported for that Pakistan has lost 33% of its
income and exports dropped by half because of new novel disease named
coronavirus and lockdown (Junaidi, 2020).

Many businesses suffering losses during the pandemic because of the

lockdown. Most of the businesses closed their business permanently due to
losses and unable to pay the labors and the business expenses. The all-
inclusive local area isolate forced by the public authority to contain the spread
of Coronavirus has unfavorably influenced miniature, little and medium
undertakings (MSMEs) in the Philippines. This report features the nature and
degree of the effect of Coronavirus on the incomes, business tasks, and
supply chains of these MSMEs. It dives further into the adapting techniques
they embraced to moderate the impacts of this interruption. The report
additionally gives suggestions to policymakers and monetary specialist co-
ops to help quicken the recuperation of the MSME area. ( MicroSave
Consulting, 2020)

There are more than 1,500 restaurants in Davao City, employing around
30,000 staff, based on the data of the company. Many of these are run by
local business with a small store or a small branch network. Mr. Lizada said
that commercial room leasing is the largest expense of each of these
establishments. (Business world, 2020)

Statement of the Problem

This research is aimed to determine the impact of pandemic to the small

business entities within Davao City. It aims to answer the following
questions.

1. What is the profile of the respondents in terms of?

1.1 Location; and
1.2 Line of business
2. What is the impact of this new novel disease to their sales?
2.1 Revenue
2.2 Cost

3. Is there a significant difference in the impact of pandemic to the small

business entities within Davao City When analyzed according to location,
line of business, and monthly sales?

Hypothesis
Ho: There are no significant difference in determining the impact of covid-19
pandemic among small business entities.
Review of Related Literature
In this chapter, related literature are addressed to find sufficient data to help
the researcher to understand why this analysis should be conducted and the
various ideas, facts, and hypotheses from the multiple authors and reading
materials to provide readers with a better view of what this research is all
about.

The outbreak of COVID-19 is a clear warning that pandemics, like other

unusual events, have occurred in the past and will continue to occur in the
future. Even if we cannot avoid the advent of harmful viruses, we should be
prepared to mitigate their effect on society. The latest epidemic has had
significant economic implications all over the world, and it does not appear
like any nation would be unaffected. This not only has consequences for the
economy; it impacts all of society, and has contributed to drastic shifts in the
actions of corporations and customers. This unique topic is a worldwide
attempt to resolve some of the pandemic problems facing humanity. A total of
13 articles address diverse areas of industry (e.g. tourism, hospitality, higher
education), shifts in customer and business behavior, legal concerns, and
aspects relevant to staff and leadership. (Donthu & Gustafsson, 2020).

The small business sector was severely impacted by the COVID-19

pandemic. A previous study by the JPMC Institute presented estimates of the
effect during the initial weeks following the declaration of a national
emergency on 13 March 2020 and as many states issued home-stay orders
that limited many businesses (Farrell, Wheat, and Mac 2020). Firms changed
their operations not only in the light of these limitations, but also when
customers cut their spending (Farrell, Greig, et al. 2020a) and transferred
some of it online (Farrell, Wheat, et al. 2020). Some firms have been
temporarily suspended. Although cash balances rebounded, helped by
pandemic relief efforts, sales remained considerably lower in May than they
were a year earlier.

To investigate the effect of coronavirus disease 2019 (COVID-19) on small

businesses, a survey of more than 5,800 small businesses was conducted
between March 28 and April 4, 2020. Several trends also appeared. Second,
mass layoffs and closures had already occurred—just a few weeks after the
crisis. Second, the probability of closure was negatively correlated with the
estimated duration of the crisis. In addition, companies had widely differing
views about the possible length of COVID-related disturbances. Third, many
small businesses are financially fragile: at the time of the study, the typical
company with more than $10,000 in monthly expenditures had just around 2
weeks of cash on hand. Fourth, the majority of companies are preparing to
pursue support through the Coronavirus Assistance, Relief and Economic
Welfare (CARES) Act. However, several expected issues with access to the
programme, such as bureaucratic challenges and difficulties in assessing
eligibility. Using experimental variance, we also measure take-up rates and
business resilience effects for loans in relation to grant-based initiatives.
(Bartik et al, 2020).

This note offers new examples of how small business owners have been
influenced by COVID-19 and how these impacts have changed since the
passing of the CARES Act. As part of a larger and continuing effort, we
gathered survey results from more than 8,000 small business owners in the
U.S. on March 28, one day after the CARES Act was enacted, through April
20. The data provides statistics on firm scale, layoffs, expectations about the
potential outlook of their companies and knowledge of current government
assistance services. We have three major observations. Second, by the time
the CARES Act was signed, small business owners surveyed had already
had a significant effect on COVID-19-related disruptions: 60% had already
laid off at least one job. Second, company owners' perceptions of the future
are pessimistic and have declined over our study period, with 37% of
respondents reporting in the first week that they did not plan to rebound
within 2 years, rising to 46% in the last week. Third, the smallest companies
had the least awareness of government aid services, the slowest raise in
awareness since the passage of the CARES Act, and never kept up with
larger enterprises. The new result suggests that small companies may have
skipped the original support for the Paycheck Security Scheme due to poor
baseline recognition and unequal access to information for larger
corporations. (Humphries, Neilson, & Ulyssea 2020)

Restrictions on social distances and changes in health and economic

demand from COVID-19 are likely to close down many small enterprises and
entrepreneurial projects, but there is still little early evidence of impacts. This
paper offers the first study of the influence of the pandemic on the number of
participating small companies in the United States, using globally
representative statistics from the April 2020 CPS – the first month in which
the early results are completely captured. The number of successful business
owners in the United States fell by 3.3 million, or 22 per cent, during the
critical two-month timeframe from February to April 2020. The decrease in
active company owners was the largest recorded, and losses to business
operation were felt across almost all industries. Afro-American companies
were particularly hard hit by a 41 percent decline in market activity. Latinx's
business owner operation decreased by 32% and Asian business owner
activity decreased by 26%. Simulations suggest that the structure of the
market partially placed these classes at higher risk of loss of economic
operation. Immigrant company owners saw a large 36% decline of business
operations. Woman company owners have also been negatively impacted
(25 percent drop in business activity). Continuing the evaluation in May and
June, the number of involved business owners remained low – down by 15%
and8%, respectively. These results of early-stage declines on small business
have significant consequences for regulation, sales losses, and potential
economic disparities. (Fairlie, 2020)
Theoretical and Conceptual Framework

Independent Variable Dependent Variable

Significance of the Study

LOCATION
LINE OF BUSINESS
NET INCOME
The researchers
COST believe that this new novel disease named coronavirus 2019
SALES
has a big impact to all businesses but the most affected are those owners in
the small entities that not necessities during the pandemic. Such as bars,
salon, car accessories and etc. Moreover, this study might contribute efficient
information to all business owners and we aims that we can provide a useful
information that can help them for the future, if there is an unfortunate events
like this. And also it can help the Future researcher like us want to solve this
new existing issues.

Definition of Terms

Covid 2019 -Coronavirus disease (COVID-19) is an infectious disease

caused by a recently discovered coronavirus virus. Most individuals infected
with the COVID-19 virus will develop mild to moderate respiratory failure and
recover without needing special care.

Business owners - This refers to the respondents of the study.

Small entities - Small business is characterized as a privately owned

company, partnership or sole proprietorship with less employees and less
annual sales than a corporation or a normal business.
 Chapter 2

METHOD

This chapter presents the methodology used in this study. It includes

Research Design, Research Subject, Research Instrument, Data Gathering
Procedure, and Statistical Treatment of the Data.
Research design

The propose research design of this study is quantitative. Quantitative design

gives emphasis on the objectives measurement to explain a particular
phenomenon. This was done through mathematical or numerical analysis of
data collected through questionnaires and survey. Quantitative design
manipulated preexisting statistical data using computational techniques and
focuses more on gathering numerical data and generalizing it across groups
of people (Earl 2010)

Burns and Grove (2003) define a research design as “is a layout for
conducting a study with maximum control over factors that may interfere with
the validity of the findings”.

A survey questionnaire was used as an instrument to gather data in the

study. Mathers, fox and hunn (2009) defined survey as a flexible research
approach used to investigate a wide range of topics. Surveys often employ
the questionnaire as a tool for data collection.
Research Respondents
The potential respondents of the study entitled the impact of corona virus 19
among small business entities are the random business owners within Davao
city specifically in the Bankerohan market. This study used a demographic
basis to easy to identify what kind of small businesses are affected the most.

Research Instrument
The researchers used adapted questionnaire from the study of ESIEC2020.

Questionnaire on the impact of covid 19 among small entities

1. What is the expected time for the company's business recovery?

(a) Within 2 weeks
(b) 1 month
(c) 1 month to 3 months
(d) More than 3 months
(e) Inability to judge
2. Please choose the most significant financial problems for your
company during the outbreak (up to two options).
(a) Staff wages and social security charges

(b) Rent
(c) Repayment of loans
(d) Payments of invoices
(e) Other expenses
(f) No specific problem
3. How long can your company's current cash flow maintain the
company's operation?
 (a) Less than 1 month
(b) 1-3 months
(c) 4-5 months
(d) 6 months or more

4. Do you expect your company's total revenue in 2020 compared to

2019 to
(a) Increase by more than 10%
(b) Increase, but less than or equal to 10%
(c) Same as last year
(d) Decrease of less than or equal to 10%
(e) Decrease of more than 10%
(f) Unable to judge
5. Please tell us your company's total revenue for 2019
(a) Less than 100,000
(b) 100,000 - 150,000
(c) 151,000 – 200,000
(d) 201,000 - 250,000
(e) Greater than 300,000
(f) Not applicable

Research Procedures

The following steps were undertaken in gathering significant data for

the study:
1. Permission to Conduct the Study – The researchers prepared a
Letter sent to the dean of business administration education.
 2. Distribution of Questionnaire – Upon validation and approval, the
questionnaires were explained and given to the random business owners.
3. Retrieval of the Questionnaire –The researchers retrieved the
respondents’ questionnaire right after they answer the survey.
4. Scoring and Collation of Data – The data gathered from the
survey had been collated and tallied by the researchers.
5. Analysis and Interpretation of Data – The raw scores were
submitted to the statistician and was statistically analyzed and interpreted.

Statistical Treatment of Data

The statistical tools employed in treating the problem were the
following:
Frequency and Percentage – This was used to determine
respondents’ profile in terms of location, line of business and monthly sales.
Mean – This was used to determine the level of Spending Habits
among Financial Management Freshmen Students.
Analysis of Variance (ANOVA) – This was used to determine if there
was a significant difference in the level of spending habits among financial
management freshmen students when grouped according to respondents’
profile.

References:

Earl R(2010) Quantitative methods Retrieved from

https://libguides.usc.edu/writingguide/quantitative

Burns and Grove (2003) Research design and methods Retrieved from
http://uir.unisa.ac.za/bitstream/handle/10500/1796/04chapter3.pdf

Mathers, fox and hunn (2009) Surveys and Questionnaires Retrieved from
https://www.rds-yh.nihr.ac.uk/wp-
content/uploads/2013/05/12_Surveys_and_Questionnaires_Revision_2009.p
df

https://www.findevgateway.org/slide-deck/2020/06/philippines-impact-covid-
19-micro-small-and-medium-enterprises