Impact of the coronavirus pandemic on small business in Russia

IMPACT OF THE CORONAVIRUS PANDEMIC ON SMALL BUSINESS IN RUSSIA

        Abstract: this article will focus on the impact of the coronavirus pandemic on small businesses. A relatively recent phenomenon, namely the coronavirus, has affected not only Russia, but the whole world as a whole. The pandemic has affected all sectors of the life of the state, from the lifestyle of the population to the economy. Most of all, the coronavirus affected small and medium-sized businesses, which simply were not ready for such a rapid change in the way of life of the whole country. As a result, many enterprises simply ceased to exist, and some took a lot of time and resources to restore their former rhythm of work.

        Key words: coronavirus pandemic, small business, state support, statistics, entrepreneurs.

At the beginning of 2020, the Russians first encountered the concept of "coronavirus". Few were prepared for the onset of the pandemic. Without initially understanding the full significance of this virus, the whole world, including our country, soon came face to face with this phenomenon. Life in all countries has changed dramatically: masks, gloves and antiseptics have become the best friends of every person; lockdowns were introduced, with which people had practically never met before; Staying at home with family has become the best protection against infection. In the two years that we have been living in a pandemic, people have become accustomed to a new way of life. But the coronavirus has affected not only the way of life, but also other areas of society. The hardest hit were small businesses.

In the spring of 2020, a lockdown was introduced in Russia, in almost all cities. People went out only for the necessary products. Under such conditions, the work of many enterprises was stopped, but most of all it affected small businesses, since the work of some areas was prohibited, and people did not need to turn to small businesses. At the same time, the state began to provide emergency assistance to entrepreneurs. The impact of the pandemic on SMEs and the results of government support were the main research questions of the SMBiz project, which was implemented by the Institute of the Public Opinion Foundation. About 3,000 small entrepreneurs who were affected in one way or another by the pandemic took part in this study. In the surveys of entrepreneurs, information was provided regarding the main type of activity of the enterprise, the region and location, as well as the size of the business (micro business, small business, medium business).

According to this study, the sectors of SMEs most affected were those related to culture, sports, leisure and recreation, tourism (approximately 56% of entrepreneurs who took part in the survey), in the restaurant business and catering (40%). Small businesses in the housing and communal services, industry and transport sectors suffered the least compared to other SME sectors. Also, young entrepreneurs who have been in the field for about 1–2 years turned out to be more stable than more established entrepreneurs and newcomers. Small businesses that sell their services and goods to the public are in a worse position than small businesses working for the state. This is because the population turned out to be not the most reliable buyer due to a reduction in income or fear of their reduction. Statistics also show that the pandemic has more affected small businesses in metropolitan areas and cities with a population of 50-100 thousand people. Perhaps this is due to the fact that in small towns (with a population of less than 50 thousand), small businesses are "used" to a small flow of customers and, in general, their position and the number of customers has not changed since the onset of the pandemic.

It is still worthwhile to understand in detail why the pandemic has had such negative consequences for small businesses. As mentioned earlier, with the introduction of lockdowns, people began to turn less to the services and products of small businesses. This led to the fact that small enterprises had practically no income, which led to a forced reduction in personnel, without which, in most cases, doing business is either impossible, or it is carried out at a very slow pace, which does not allow reaching the former level of production. That is why many representatives of small businesses ceased to exist, due to the inability to provide their business at a level that would allow them not to lose money.

Realizing the seriousness of the situation and the situation in which small entrepreneurs find themselves, in the spring of 2020, the state began to actively support small and medium-sized businesses. As one of the support measures, the Government of the Russian Federation introduced a moratorium on inspections from April 1 to April 31, which as a result was extended until the end of 2021. It was expected that this measure would weaken the checks on small businesses, but according to statistics, this did not happen. Most of the interviewed entrepreneurs were not affected by the moratorium on the collection of debts and fines, and among those who took advantage, only a quarter believe that this measure was useful. Also, according to the Government Decree, monetary compensation affected those small entrepreneurs whose business was suspended due to COVID-19. The amount of compensation was equal to half the minimum wage for each employee of the enterprise for every two weeks of downtime. According to information that can be found on the website of the State Duma, 8 billion rubles were allocated from the state budget for this support measure. Grant payments were introduced to small businesses that were most affected by the pandemic. The lump-sum payment was equal to the minimum wage (12,792 rubles) for each employee of a small enterprise. Tax incentives were introduced for small businesses, according to which the costs of masks and test systems were considered when paying income tax, and no tax was levied on lump-sum grants provided by the state to small businesses. In 2020, a Commission was established to support small and medium-sized businesses that suffered during the period of coronavirus infection. In addition to small businesses, support was provided to individual entrepreneurs, dentists and cinemas, airlines and tour operators, tenants. In other words, the state has done quite a lot for all business representatives in Russia who have been affected by an unforeseen circumstance - the onset of a coronavirus infection that has changed the lives of people around the world so much. But these measures, for the most part, had no practical benefit, but only showed that the work in the Government to eliminate the negative consequences is underway.