Still recovering from the financial impact of the COVID-19 delta variant, small businesses are now facing another wave of the pandemic: the omicron variant. In an already challenged economy, the rapid spread of omicron has a rising number of small businesses struggling just to keep the lights on and the doors open. In fact, the U.S. Census Small Business Pulse Survey reports that in the first week of the year, small businesses reported a staggering 33% decrease in revenue due to issues related to the increased rate of omicron infections.
Today, this highly transmissible variant is a growing issue of concern among small businesses. Of the business owners surveyed, 44% said they are greatly concerned that omicron will continue to negatively impact their financial recovery. Of course, in industries such as hospitality, healthcare, massage, travel and other service-based businesses, omicron is a particularly worrisome issue.
An estimated 5 million Americans are likely to be out sick or quarantining at the peak of omicron, reflecting 2% of the nation’s workforce.
Staffing Challenges Compound
From the very onset of COVID-19, many small businesses have grappled with ongoing staffing issues. However, the rapid spread of infections due to omicron has since exacerbated the problem. According to the Centers for Disease Control and Prevention (CDC), the omicron variant appears to be more easily transmissible than the original SARS-CoV-2 virus and the delta variant, and the CDC expects that people who are infected can spread the virus to others — even if they are vaccinated and asymptomatic.
This has caused a nationwide “sickout” that has left many businesses unable to fill positions. As a result, some businesses have had to cut back on hours of operation and wait out the surge. Of course, not every business can afford to operate at half capacity for an indefinite period. For service-based businesses, not having qualified workers with special skills or training can mean cutting services or not operating at all.
According to the Small Business Administration Office of Advocacy, 90% of the 31.7 million small businesses in the U.S. have fewer than 20 employees, and 80% have fewer than 10 employees. Therefore, if a business loses just one worker due to illness who is out for an unspecified time or who must quarantine for 10-14 days due to contracting or being exposed to the virus, the impact to operations can be significant.
Supply Chain Disruptions Intensify
Another area in which omicron has financially impacted small businesses is in the already strained supply chain. As a result of supply chain disruptions, many businesses are experiencing a reduction in the demand for products, decreased productivity due to increased absenteeism and the ongoing labor shortage, and increased cost pressure for sectors that rely on the global supply chain. In addition, the nationwide driver shortage has not only worsened issues regarding late shipments to businesses – it has also increased supply costs.
Workplace Rules and Regulations Become More Stringent
The rise in omicron cases has already triggered a new wave of restrictions for small businesses, adding to an already exhaustive and complex list. To complicate matters, new rules and changes to existing regulations will differ from state to state. For the most part, the majority of these rule changes involve employee testing, such as who must be tested and when, as well as the type of test (e.g., requiring self-tests that an employee can do at home or having the employee go to a lab for testing.) Other areas where restrictions are tightening include when and where employees must wear a face covering, and what type of mask is considered compliant with the individual state’s rules.
Conclusion
While some industries have experienced issues such as staffing challenges, fewer customers and higher supply costs, other sectors are in a better position to successfully manage and operate amid the surge in omicron-related labor problems. Of course, businesses that are considered essential will continue to thrive, despite issues brought on by the pandemic.
If you’re a retail insurance broker who would like to learn more about approaching essential small businesses in this current pandemic climate, the small-business experts at Builders & Tradesmen’s Insurance Services Inc. invite you to download our latest publication, “Agents' Guide to Pandemic-proof Businesses.”
For additional information, visit www.btisinc.com or call (877) 649-6682
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