SMALL AND MEDIUM-SIZED BUSINESSES: TACKLING COVID-19 CHALLENGES BY CHANGING BUSINESS-MODELS

Abstract

In this paper the surveys conducted on small- and medium-sized enterprises around the world (including Ukraine) have been analyzed. SMEs face a bigger risk than larger firms affected by COVID-19 pandemic. Although governments support them to a certain extent, SMEs are trying to survive the pandemic by themselves. It is true especially for Ukraine, where SMEs are an important element of economy (as they account for 77,9 percent of employment, generate 64,4% of share value added and 20 percent of GDP), but they do not have much hope for government help and do almost without it. Therefore they cut their costs, make employees redundant, seek other ways to approach their customers despite severe COVID restrictions, and so on. They also adjust their business models to the new harsh environment, but they need guidance in this realm, how to make it correctly and efficiently.Having analyzed 4 types of solutions offered by R. Ackoff, we arrived at the conclusion of using one of them for SMEs - Solution, to comply with the principles of applied systems analysis. Absolution appeared ineffective, Resolution – not effective enough, and Dissolution – inapplicable for dissolving problems caused by COVID-19.For adjusting business-models we suggest owners of SMEs use Business Model Canvas by A. Osterwalder as a simple and comprehensive one. To the Canvas we added influence linesto show that some blocks influence mainly Cost structure, some others – mainly Revenue streams, and Value proposition, both of them. It could be said that Cost Structure is mainlyaffected from the supply side, and Revenue streams – from the demand side.The Template of Business Model Change for SMEs has bees worked in this study. It encompasses 2 levels: the first level – Analysis (the main points which SMEs owners should analyse first) and the second level – some main solutions which could be developed according to the analysis carried out. We have united 2 blocks devoted to customers into the one (Customers&Relationships) so that prospective users could better understand these interconnected blocks and making decisions within them. The Template is practically applicable for changing the business models of small and medium-sized enterprises in Ukraine and any other country as well.The results obtained in the study can be used in further research in this realm.