A STUDY ON FINANCIAL IMPACT OF LOCKDOWN TO BUSINESS

OWNERS

Submitted by:
Rubina Sangroula

Reg no: 7-2-0205-0114-2016

Symbol no: 2050074

A THESIS REPORT

Submitted to:
Mr. Rabin Mainali

Kankai Awasyia Campus

Birtamode, Jhapa

December, 2020

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 ACKNOWLEDGEMENT

It gives me immense pleasure to have the opportunity to carry out this study. The completion of this
report study could not have been possible without the participation and assistance of so many
people whose names may not all be enumerated. I are humbly expressing the deep sense of
gratitude to those people contributing directly or indirectly to this study.

I owe special debt of gratitude to Mr. Rabin Mainali for his support, guidance and perseverance
throughout the course of this work which has been constant source of inspiration for us. My sincere
thanks to Kankai Awasiya Campus for giving me the chance to prove my work.

My thanks and appreciation to all the respondents for their participation, co-operation and expressing
their experiences without which, this work would not have seen the light.

We would like to express our special gratitude towards every individual who assisted us throughout
this research.

Sincerely,

Rubina

Sangroula

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 EXECUTIVE SUMMARY

The study is entitled as “Financial Impact of Lockdown to Business Owners”. The purpose of
this study is to investigate what affect the business owners financially during lockdown. The
sudden lockdown that might happen in a country has a huge effect in every individuals and
businesses. The recent lockdown of 2020 led the researchers to think about the small scale
business owners having 1-5 employees with limited profit on what would affect them more in
financial terms.

The independent variables considered in this project are rent, salary and other expenses. The
variables are kept as per the convenience of the researchers. To determine this, a survey was
conducted among the business owners inside and outside the Kathmandu valley. The research
design used in the research is Descriptive Research Design with the help of questionnaire and
software like Microsoft Word and Microsoft Excel. Tables and figures have been used for better
analysis. The survey is analyzed using mean and standard deviation. The total sample size of the
study is 35 small scale owners of Nepal.

This study has revealed that majority of the owners have less financial impact from rent because
it has minimum risk involved. It is found that most of the owners have a business of clothing.
More than half of the owners have thought for an alternative ways of business which means that
they are flexible enough to make changes in the business. Most of them have been doing the
business since more than 10 years where maximum of them are from inside Kathmandu valley.
They have certain expectations from the government that might relief them from financial
burden during lockdown in which most of them want a financial package that would lower down
their expenses.
 TABLE OF CONTENTS

ACKNOWLEDGEMENT...........................................................................................................................ii
EXECUTIVE SUMMARY........................................................................................................................iii
TABLE OF CONTENTS...........................................................................................................................iv
LIST OF TABLES.....................................................................................................................................vi
LIST OF FIGURES...................................................................................................................................vii
CHAPTER I................................................................................................................................................1
INTRODUCTION.......................................................................................................................................1
1.1 Background of the Study...................................................................................................................1
1.2 Statement of the Problem...................................................................................................................2
1.3 Research Questions............................................................................................................................2
1.4 Objectives of the Study......................................................................................................................2
1.5 Significance of the Study...................................................................................................................2
1.6 Literature Review..............................................................................................................................3
1.7 Conceptual Framework......................................................................................................................4
1.8 Research Methodology......................................................................................................................4
1.8.1 Research Design.........................................................................................................................4
1.8.2 Data Collection Method..............................................................................................................5
1.8.3 Population and Sample...............................................................................................................5
1.8.4 Methods of Data Processing and Analysis..................................................................................5
1.8.5 Limitations of the Study.............................................................................................................5
CHAPTER II...............................................................................................................................................6
PRESENTATION AND ANALYSIS OF DATA.......................................................................................6
2.1 Description of the Sample..................................................................................................................6
2.2 Presentation and Analysis of the Primary Data..................................................................................6
2.2.1 Gender of the Respondents.........................................................................................................6
2.2.2 Location of Business...................................................................................................................7
2.2.3 Period of Business......................................................................................................................7
2.2.4 Possession of Outlet....................................................................................................................8
2.2.5 Field of Business............................................................................................................... 9
2.2.6 Number of Employees................................................................................................................9
2.2.7 Payment of Salary.....................................................................................................................10
 2.2.8 Source of Payment....................................................................................................................11
2.2.9 Expectation from Government..................................................................................................11
2.2.10 Alternatives.............................................................................................................................12
2.3 Descriptive Analysis of Lockdown to Business Owners..................................................................13
2.4 Major Findings...............................................................................................................................13
CHAPTER III............................................................................................................................................15
CONCLUSION AND RECOMMENDATION.........................................................................................15
3.1 Conclusion.......................................................................................................................................15
3.2 Recommendation.............................................................................................................................16
REFERENCES
APPENDIX

Questionnaire
 LIST OF TABLES

Table Title Page

1 Gender of the Respondents 6
2 Location of Business 7
3 Period of Business 7
4 Possession of Outlet 8
5 Alternatives 12
6 Descriptive Analysis of Financial Impact of Lockdown to 13
Business Owners
 LIST OF FIGURES

Figure Title Page

1 Field of Business 9
2 Number of Employees 10
3 Payment of Salary 10
4 Source of Payment 11
5 Expectation from Government 12
 CHAPTER I

INTRODUCTION

1.1 Background of the Study

Lockdown is a time period during which no individual is allowed to go out of the house without
an emergency permit. During such times, businesses close down physically though they may be
working from home. Even though the work may go online, no employees go to the office and
thus the outlet or the workplace is closed. It is a vital issue to business owners considering the
current lockdown period where business economy is rolling down but they have pressure to pay
salary to their employees, tax to government, electricity and other bills, office and warehouse
rent, and bank interests and penalties.

The government is urging the business owners to show sympathy towards the needful employees
and pay them but is there any relief to the owners. There is a complete closure and businesses are
on a standstill. Businesses get hard to survive.

The business which borrow heavily to run their operations will find it harder to tap credit as the
outbreak curtails economic activity. If companies are unable to tap credit to pay their rent, make
payroll or finance other activities, it could force them to slash costs, lay off workers, pause
investments and even declare bankruptcy. The pain and uncertainty of the impact of the corona
virus is staggering and likely to be substantial. Business persons are being forced to take drastic
steps to continue operating and many are fearful about their futures.

Taking into consideration this issue of business owners, we are writing this proposal to move
ahead with the research project.

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1.2 Statement of the Problem

Business owners may have started the business since a long time or may have just started.
Whenever the operations might have started, they may not have enough cash in hand or at the
bank to use it for salary and other expenses when there is no operation in the time of lockdown.
Some businesses may be able to cover some expenses for some time but then, they will start
having problems like in the current situation of Covid-19 lockdown in Nepal which almost lasted
for three months. It is important for them to analyze and decide critically on how they would
overcome these difficult times, especially in financial terms since they need to incur a lot of
expense when there is a halt in revenue.

1.3 Research Questions

 How will the business owners manage to pay all expenses?

 How will the business owners overcome the loss of lockdown?
 What do the business owners expect from the government?

1.4 Objectives of the Study

 To analyze the financial situation of the business owners during lockdown

 To examine the government support for business owners
 To explain the mindset of business owners on how they are planning to continue their
business after the lockdown gets over

1.5 Significance of the Study

This study helps to find out and know about the financial impact of lockdown to business
owners. This study provides knowledge about how the owners would regain the same position
that they had before lockdown or even reach a higher position. This would also let us know what
they expect from the government to relief and support them.

1.6 Literature Review

The ongoing corona virus has changed the world and the nature of how this world kept going.
Same is the effect on businesses, financial effect to be specific. Lockdown is an emergency
protocol initiated by state authorities that usually prevents people from leaving an area (Sarla,
2020)

Finance has a huge role in any business. Its impact can affect all other departments of a business
and vice versa. It is important to analyze all the financial aspects whether it is in terms of cost,
price or any other transactions related to money. Financial models are not about absolute values;
they are about relationships. A good financial model demonstrates the relationships and the
business tradeoffs that compose the profitability potential of the business idea. If you understand
the relationships, the drivers of revenue, drivers of cost, and critical success factors, you
understand the core of the business (Trkman, 2010).

Business owners are the ones who decide on top notch decisions. They need to have core
competencies and efficient skills to deal with any issues whether it’s financial or any other. Form
a deeper relationship with competitors and suppliers and seek collaboration (Reh, 2019). This is
one of the paths which can best fit business owners post this lockdown. Have a workable what-if
plan for key family and staff to minimize disruption. Know how to grieve during loss as all
wounds seen and unseen need to heal (Kuligowski, 2019). These are another two paths
mentioned, which can be useful tips to owners.

An effective, efficient way to define success for you and your business is to create a strategy for
how you will achieve success and outline the goals you need to accomplish along the way. There
is no business without strategy to get there. Owner must thoroughly research their industry,
competition and audience. This pandemic might have brought failure but this same failure can
lead to business success in future. But, one need to focus on vision and be passionate about what
you do.
 1.7 Conceptual Framework

Dependent Variable
Independent Variable

Rent

Salary Financial Impact on Business

Other Expenses (Interest, Tax etc.)

1.8 Research Methodology

Research methodology implies the basic research method to be carried out through the entire
study. Methodology describes the site selection, research design, population and sample, sources
of data, methods of data collection and data analysis model.

1.8.1 Research Design

The research design in the study is Descriptive Research Design that helps to identify the
financial impacts of lockdown to business owners. It is used by various statistical data. The
qualitative research design shall be used in order to show the relationship between questionnaires
and to interpret the data from findings.
 1.8.2 Data Collection Method

The data collection was qualitative that is to be analyzed by using questionnaires. The data for
the study were collected from June 25, 2020 to July 15, 2020. Participants include people from
various places inside and outside of Kathmandu valley. The primary data has been collected by
developing a questionnaire and secondary data through online websites, journals, articles and
other relevant sources.

1.8.3 Population and Sample

This study was taken from the business owners of the country and there was convenience
sampling where each respondents were given a set of questionnaires. The sampling population
was the business owners of the country. Sample in this report are the business owners who the
researchers could contact during the lockdown. The sample size is 35 for the study.

1.8.4 Methods of Data Processing and Analysis

Different methods are used for editing, processing and analysing the collected data. Microsoft
Word is used to analyze the collected data. Microsoft Excel is used to create bars and charts.

1.8.5 Limitations of the Study

 This study could not reach all the business owners of the country.
 Structured questionnaire was used as a major tool for data analysis.
 Convenience samples were taken.
 CHAPTER II

PRESENTATION AND ANALYSIS OF DATA

2.1 Description of the Sample

This chapter discusses the data analysis and findings from 35 questionnaires completed by the
business owners. All the raw data are edited, coded and classified into different groups. It
presents the data in precise form so as to make it easier for describing, analyzing and interpreting
data.

2.2 Presentation and Analysis of the Primary Data

Presentation and analysis of data was done with stated objectives. The data and information was
collected using a questionnaire method. Graphical presentations such as table, pie- charts etc.
were used to present data wherever needed. Different software such as MS Word and MS Excel
were used for data analysis and calculation.

2.2.1 Gender of the Respondents

In this study, the data are classified into male, female and other. The following table describes
the gender wise distribution of respondents selected for the study.

Table 1

Gender of the Respondents

Gender Frequency Percentage (%)

Male 19 54
Female 16 46
Others 0 0
Total 35 100
(Source: Survey, 2020)
Table 2.1 shows that among 35 respondents 54 percent of them were male and 36 percent were
female. From the above table, it can be concluded that the male are found to be more inclined
towards starting up their own business rather than female.

2.2.2 Location of Business

The respondents who were sampled for the study had their business inside and outside of
Kathmandu valley. So, the information about the location of business is shown in the table.

Table 2

Location of Business

Location Frequency Percentage (%)

Inside Kathmandu valley 19 54
Outside Kathmandu valley 16 46
Total 35 100
(Source: Survey, 2020)

Table 2.2 shows that out of 35 respondents 19 of them have their business inside Kathmandu
valley and remaining 16 have their business outside Kathmandu valley. This reflects that people
are more interested and keen to have their business in the valley itself.

2.2.3 Period of Business

The respondents had established their business in different times and are running since then. So,
the time period is categorized as less than 5 years, 5-10 years and more than 10 years. The time
period will help us to provide us insight about in which phase the business is in and accordingly
the owners can take the corrective actions which will help them to be financially secured and
stable.
Table 3

Period of Business

Period Frequency Percentage (%)

Less than 5 years 11 31
5-10 years 3 9
More than 10 years 21 60
Total 35 100
(Source: Survey, 2020)

Table 3 presents the data related to the time period that the respondents have been running their
business. Out of the total respondents, 31 percent of them have been running within 5 years, 9
percent between 5 to 10 years and 60 percent been running for more than 10 years. Thus,
maximum respondents were running business for more than 10 years.

2.2.4 Possession of Outlet

The place where the respondents were doing business either belonged to them or took on lease.
So, it is categorized as ‘Yes’ or ‘No, it is rented’ in terms of possession of the outlet.

Table 4

Possession of Outlet

Possession Frequency Percentage (%)

Yes 18 51
No, it is rented 17 49
Total 35 100
(Source: Survey, 2020)

Table 4 illustrates that 51 percent of the respondents owned their business outlet whereas 49
percent paid for rent on others’ land which means maximum of them had their own outlet.
2.2.5 Field of Business

The respondents have different kinds of business for which open options were given so that they
would put down their type of business on their own. The researchers have categorized it as given
below to make it easier to analyse.

Field of Business
Clothing

Café/Restaurant Grocery/Stationary Jewelery

6%
Employment/Security/Distributi on Service
6% Parlor Education Tobacco/Liquor
26% Equipments/Electronics
6%

3% Kitchen items/Metal Fabrication

6%

8% 11%

14% 14%

Figure 1 Field of Business

From the figure 1, the researchers can interpret that 26 percent have a clothing business; 11
percent have café/restaurant; 14 percent have grocery or stationary; 14 percent have jewelry
shop; 8 percent have service of employment, security or distribution; 6 percent are in education
sector, 3 percent of them have parlor, while 6 percent each are in tobacco/liquor,
equipments/electronics and kitchen items/metal fabrications respectively. It can be concluded
that most of the respondents are involved in clothing business.

2.2.6 Number of Employees

The research is done in small scale businesses who have limited number of employees. So, the
number of employees is categorized as 1-3 and 4-5.
 Numbers of Employees

31%
1-3
4-5

69%

Figure 2 Numbers of Employees

Figure 2 shows that 69 percent of business owners have 1-3 employees in their business while 31
percent of them have 4-5 employees which means maximum owners have employed 1-3 people.

2.2.7 Payment of Salary

This lockdown has affected the business owners like any other people. Because their turnover
declined, not everybody was able to pay to their employees. The researchers categorized this
determinant if they paid their salary, did not pay or paid some portion.

Payment of Salary

34% Yes
46% No
Some portion (not full)

20%

Figure 3 Payment of Salary

Figure 3 depicts that 46 percent of owners were able to pay to their employees, 20 percent were
not able to and 34 percent were able to pay some portion of the salary. This means most of them
were able to pay salary even though their businesses were nearly in halt.

2.2.8 Source of Payment

On asking the respondents how they were paying their other expenses like interest, tax , etc., the
researchers categorized the source as saving, personal loan, prior profit and not paid yet.

Source of Payment

23%

37% Saving
Personal loan Prior profit Not paid yet

34% 6%

Figure 4 Source of Payment

Figure 4 illustrates that 37 percent of the respondents paid their expenses from saving, 6 percent
from personal loan, 34 percent from prior profit and 23 percent have not paid the expenses yet.

2.2.9 Expectation from Government

Lockdown has created many problems for the small business and they are expecting certain kind
of help from the government side and the information regarding what type of help they want is
shown in the figure.
 Expectations from Government

23%

40%
Provision for rent off
Discount in bank interest Other financial package

37%

Figure 5 Expectations from Government

Figure 5 provides the information that about 40 percent of the respondents want government’s
help in the form of financial package, 37 percent of them want discount in bank interest and
remaining 23 percent of them want help in the form of rent off.

2.2.10 Alternatives

To cope with the new normal many business owners have started to think about the alternative
business and the information regarding the alternative business is shown in the table.

Table 5

Alternatives

Alternatives Frequency Percentage (%)

Yes 19 54
No 16 46
Total 35 100
(Source: Survey, 2020)
The table 2.5 depicts that 54 percent of the respondent have thought about the other alternative to
their present business whereas 46 percent of them have not thought about any other alternatives.
This shows the necessity of business owners to earn money anyhow by coping with new normal
life.

2.3 Descriptive Analysis of Lockdown to Business Owners

Descriptive statistics was used to determine the main features of the collected data in quantitative
terms. It is used to examine the central tendency of the data in terms of mean and standard
deviation. Mean values are showing significant importance which shows major impacts of
lockdown. The result shows the intensity of variable. Standard deviation is also very important as
it indicates the deviation from the mean value.

Table 6

Descriptive Analysis of Financial Impact of Lockdown to Business Owners

Determinants Mean Standard Deviation

Rent 17.5 0.71
Salary 11.67 4.51
Other Expenses 8.75 5.0

Table 6 indicates the measure of central tendency that offers an average of series of data.
Average mean ranges from 8.75 to 17.5 while standard deviation ranges from 0.71 to 5.

2.4 Major Findings

These are some of the major findings of the report.

 19 of the respondents were male and 16 of them were female.

 Again, 19 of the respondents had business inside Kathmandu valley while 16 had outside
of Kathmandu valley.
 11 of the respondents have been doing the business for 1-5 years, 3 of them for 5-10
years and, 21 of them for more than 10 years.
 18 respondents owned their outlet while 17 did not.
 The respondents were involved in various field of business but the majority of them were
in clothing.
 Most of the respondents had 1-3 employees in their business.
 Majority of the respondents were able to pay salary to their employees while few of them
either could not pay or could pay only some portion.
 While there were many sources to pay the expenses, many of them paid from their
savings.
 Maximum respondents chose other financial package as to expectation from government.
 Most of the respondents have thought for an alternative during such lockdown period.
 The mean value differs as per the variables and the size which ranges from 8.75 to 17.5.
 The standard deviation of the independent variables varies from 0.71 to 5.
 CHAPTER III

CONCLUSION AND RECOMMENDATION

3.1 Conclusion

At the time of writing, COVID-19 cases have exceeded 15 million and are continuing to increase
world-wide. The COVID pandemic has become more serious and has affected in different
sectors. Economic sector is one of the major area which has been badly affected. Small business
which is operated with the help of 4-5 employees has also been severely affected. In context of
Nepal, the business has been shut down for about 3 and half months. This has brought the
financial problem for business owner as they are obliged to pay rent, tax, bank interest, salary
and other expenses. So, it has been financial burden for them.

This study revealed that the majority of the respondents were male and 19 of the respondents had
their business inside Kathmandu valley. It was also found that 11 of the business owners had
been running their business for about 1-5 years only which means they are at the start up phase
and with this pandemic they are badly affected. 17 of the respondents had been operating their
business in a rented house and are having very bad time to pay rent as well. Majority of them
were found to be involved in clothing business.

Any business is operated with the help of employees and from this study, it was found that
majority of respondents had been operating their business with 1-3 employees and are having
difficult times to pay their salary and both the parties had agreed to a conclusion of half salary
and were paid through the personal savings. The business owner had expected some financial
package from the government which will help them to restart their business to some extent. With
the addition of lockdown time and again, majority of them had thought of alternative business so
that they can make their livelihood.
3.2 Recommendation

The following implications are made to minimize the financial impact of lockdown to business
owners:

 Business owners who are operating their business in rented house are having difficult
times to pay rent, so landlord should give them some discount or make provision of
paying half rent till the lockdown gets over.
 Owners are not in a state to pay the salary for their employees. Thus, both the parties
need to have a consensus of half salary so that both of them will be benefitted.
 Bank and financial institutions should also decrease their interest rate and make a
provision for some extra loan to them for certain period of time.
 Government should bring some financial package for the business owners which will
help them to resume their closed business.
 The owners should also think of some alternative business if there is less chance of their
previous business to reopen.
 REFERENCES

Kuligowski, K. (2019). Entrepreneurs Define the Meaning of Business Success. Business News Daily .

Reh, J. (2019). Understanding Critical Success Factors and Indicators in Business. The Balance Careers .

Sarla, G. S. (2020). COVID DAIRIES:An Asian Perspective. Journal of Business Research .

Trkman, P. (2010). Business Process Management. International journal of information management ,

125-134.

https://corporatefinanceinstitute.com/resources/knowledge/finance/what-is-finance-definition/

https://smallbiztrends.com/2019/08/what-does-an-entrepreneur-do.html

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 APPENDIX
Questionnaire

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