COVID-19 blow harder on smaller companies

KUWAIT CITY, Dec 19: COVID- 19 has devastated small businesses around the world with millions of small business jobs vulnerable, and firms with fewer than 100 employees the hardest hit. Although statistics on the contagion differ for countries and regions, the severe economic effect of the pandemic is undeniable. Economies are in shambles, with no sign of immediate relief.

Kuwait is no exception. Business in Kuwait is impacted with personal service, hospitality and retail most badly hit. The blow has been harder on smaller companies lacking cash flow and capital. Small and medium enterprises (SMEs) in Kuwait operating under social distancing are facing diverse challenges, including dwindling staff and customers. The F&B sector is badly hit. Al Anba mentions that around 30 per cent of restaurants and cafes in Kuwait have permanently shut down.

This percentage will increase by the first quarter of the next year due to the inability of restaurant owners to meet up their financial liabilities. There is a heightened state of anxiety in the business sector.

Arab Times spoke to three small and medium business owners from different sectors about their predicament. THHABA, a fine jewellery house was founded by Abrar Alebrahim, an architect by profession in 2011. THHABA’s design process is inspired by architecture and structural systems, as well as traditional jewellery designs of the Middle East & Asia.

In 2016, Abrar opened her flagship store in the Shuwaikh Industrial Area, which she was forced to close down as an economic fallout of the pandemic. Jassim Al Saddah, a graduate of the School of Architecture in London, founded Babnimnim Design Studio, an innovative architecture/interior design firm based in Kuwait with selective projects in the F&B sector, hospitality, commercial and residential sectors in the Middle East. Like Alebraham, Saddah too had to find ways of adapting to the uncertainties brought on by COVID-19.

Arab Times also spoke to Lujain Al Fulaij, a restaurateur who founded Singa Pura, the first Singaporean restaurant in Kuwait in April 2019, just ten months before the onset of the pandemic. Al Fulaij has been struggling to keep her restaurant at Dasman Complex afloat with no support from the government.

Arab Times: How has COVID impacted your business? Abrar Alebrahim: I was forced to close down my beautiful and relatively new flagship store, which was my most significant investment. I had to reduce expenses as much as possible to keep paying employees who were all of a sudden operating from home. It was tough to work remotely and generate sales. The price of gold was sky high, and all our factories were closed. Rent was a major expense. We were forced to stay for the three month’s notice period before we were allowed to leave the space. Restrictions on shipping as well as regulations from the Ministry of Commerce cut off our supply chain for diamonds and precious stones.

Jassim Al Saddah: COVID-19 greatly impacted small to medium private companies. Project timelines were upended, constructions halted, and restrictions on one’s mobility resulted in various outcomes. Supplies were harder to acquire.

Lujain Al Fulaij: Once COVID hit, our sales were affected by a 50% drop. With no support from the government for SMEs, we had to cut our costs and focus solely on delivery which is costly due to platform commissions and packaging costs. We cut costs by eliminating spendings such as marketing and branded packaging and also removed benefits from staff while ensuring they were still able to cover their salaries, rent, necessities and then some. With social distancing imposed, we can seat about 50% fewer people. This is expected to be a long term change. As far as consumer behaviour is concerned, we also see less spending.

AT: Have you been able to adapt to the situation? I have read a few reports that mention that small businesses have to innovate to survive.

Abrar Alebrahim: That is exactly what we had to do to keep the business going. Larger corporations with bigger teams found it easier to adapt and keep the wheel going. But it has been far more challenging for smaller units. We had to innovate. I shifted my focus from developing products to being generous with information. My Instagram became a hub for video collaborations and live chats with guests from around the world. I stopped posting about our products and focused on influencing a positive and optimistic (yet realistic) attitude and shared my knowledge with the community. Survival meant keeping the business going with minimum expenses and without draining the bank account. My priority was to keep paying my employees even though there were no sales.

Jassim Al Saddah: Companies like Babnimnim adapted and persevered to overcome these struggles during the pandemic. We adhered to health protocols and implemented work from home set up. Meetings were mainly done via zoom or video calls; and when we went back to work last June, strict social distancing guidelines and the wearing of masks were mandated; something that we still comply to this date.

AT: Has the government helped you in any way? What support do small business owners need to keep their business going?

Abrar Alebrahim: The only help I received from the government was the advance payment of six months financial support that was given to Kuwaiti business owners as well as the suspension of the social security payment for six months. But I expected more regulations that would support tenants. It was essential for us to share the losses so we could all survive.

Jassim Al Saddah: The government provided targeted assistance programs for the country, such as waiving penalty charges for the employees’ residences; however, little attention was given to private companies.

Lujain Al Fulaij: The support needed from the government is reduced ministry fees, rent reduction for SMEs and no-risk-funding or grants to cover losses. Unfortunately, the government hasn’t acted yet, and many SMEs have already shut down, including two other restaurants in Dasman Complex.

AT: Do you expect to see any lasting changes post-pandemic as far as SMEs are concerned?

Abrar Alebrahim: We are already experiencing a “new normal” that will continue until vaccines come in use. After that, humans can go back to practising being the social creatures they are. In industries that depend on human interaction and engagement, such as mine, it is very challenging to move to the digital experience. I can see SMEs making smarter choices in the future in terms of expenses and fixed overheads as well as the way they hire and operate. Processes and operations are being developed to make room for more flexibility in difficult times and most importantly building awareness within the workforce that we are all in this together. When needed, sacrifices will be made. The business owner needs to model his/her attitude and behaviour to create trust and camaraderie in his team.

Jassim Al Saddah: In a way, it will affect the business since the workforce is limited. Hence, project timelines will be longer than usual. Automation is now considered a necessity instead of a luxury.

By Chaitali B. Roy Special to the Arab Times