How differently small businesses have been affected by the pandemic

The smallest companies have been affected by and dealt with the coronavirus pandemic in very different ways. Researchers at Luleå University of Technology have found three different types.

Gym owners, actors, engineers, cheese makers, web developers, tourism entrepreneurs, hairdressers, advertisers and PR people. Yes, micro and small business owners are different. For many, the last two years have been a crisis, but not for all. For some, the pandemic has been an opportunity.

Professor Sara Thorgren and PhD student Alina Veksler, at Luleå University of Technology, have followed 27 northern companies. The study is part of Norrlandsnavet, which is an investment in northern small and medium-sized companies for eight years.

– We have mainly studied how they were affected financially and acted based on the current situation. And we can see three different types of behavior, says Sara Thorgren.

One of the types is the Open-minded. This is the entrepreneur who suffered financially by losing customers and reducing their sales. But the losses were spread out over time.

– Because they were not acutely affected by the extreme situation, they were able to be curious, open and flexible, says Sara Thorgren.

– We had a cheese producer who owned a shop and had staff they had to lay off. But it didn’t happen overnight. The fact that the losses were spread out over time allowed them to be open to testing different ways of selling the cheese, for example through digital channels. “In the end, what proved most successful was joining forces with other local producers and selling the cheese online,” says Alina Veksler.

The second type of entrepreneur is the Defender, who suffered immediate losses that needed to be addressed. It was a matter of survival here and now. For example, there was a tourism company offering dog sledding tours, where customers disappeared overnight. The owners had no choice but to sell off some of the dogs because the cost of feeding them became too high.

– In such a situation, it is not appropriate to be curious. When the crisis washes over you like that, it’s all about protecting yourself, says Sara Thorgren.

The third type of entrepreneur during the coronavirus pandemic is the development-oriented one. In the uncertain times that prevailed, they saw opportunities to develop the company – to take that step they had intended to take but never did. The economy took a hit from the pandemic but was good enough to afford to think ahead.

– One consulting firm switched entirely to doing business over Zoom or Teams and even built its own platforms where the services were offered. This allowed them to expand their market – from local to national, says Alina Veksler.

Tools for uncertain times

The purpose of categorizing micro and small entrepreneurs into different types is not only to document how businesses acted during the coronavirus pandemic. The researchers also see the types as a tool that can be used in other uncertain circumstances. Sara Thorgren believes that the study can provide an insight into how companies may act when something unforeseen happens in the outside world that strongly affects the companies’ business.

– The framework with the different types is general and can be used as a tool to understand how companies understand and react differently to the same event. For some, a specific external event will cause an immediate and significant loss, while others will experience financial problems only long afterwards. Therefore, not everyone needs the same type of support measures, for example. We need to keep this in mind when we talk about how to support businesses in a crisis, says Sara Thorgren.

Contact
sara.thorgren@ltu.se
alina.veksler@ltu.se

More on Sara Thorgren’s research on small businesses and the coronavirus pandemic.

READ MORE ABOUT NORRLANDSNAVET
On their website.
Esbri article about the initiative here.
Esbriinterview article with Lena Fritzén, executive member of the Kamprad Family Foundation that finances Norrlandsnavet.