Will rural businesses survive the pandemic?

Analysis: Covid-19 and measures to contain the spread of the virus have significant impacts on rural economies.

As the country emerges from its second Covid-19 lockdown and Level 5 restrictions in nine months, rural businesses have removed the shutters once again and welcomed visitors back. The pandemic has highlighted the fragile nature of rural business and how lockdowns challenge the ability to remain viable in this tumultuous time.

As part of ongoing research, business owners spoke of the raft of challenges that make them question the longer term impact of Covid restrictions on their survival. Findings suggest that rural populations have faced more significant challenges than their urban counterparts in the last nine months. This is due to a dependence on sectors most impacted by the pandemic, an increased sense of isolation and a lack of connectivity for remote education, work and online business.

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"Covid put a brake on everything"

There is an acute awareness of the increased pressure Covid will place on rural economies. A recent report by the Regional Assemblies highlights how coastal towns and rural areas are particularly exposed. Rural businesses have faced shocks before. Some had to reinvent themselves following the 2008 financial crisis, while others came through the challenges of the foot and mouth disease in 2001.

Nonetheless, business owners agree that that they have never faced anything quite like the challenges of Covid. Even though it is predicted that it will be a short sharp shock and cause a temporary recession, the concern is the longer term implications for rural areas if these businesses do not survive.

Rural enterprises and viable communities

Rural enterprises have a bigger purpose than creating incomes for owners. They allow for viability and employment in areas traditionally reliant on agriculture and extractive industries. The businesses also contribute to the sustainability of populations and secure futures for rural areas. They're often niche and sustainability based and contribute to positive development of the particular area.

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Pandemic lockdowns placed significant pressures on rural businesses. The pandemic has seen the largest employment losses in sectors including tourism, hospitality, public houses, food and retail. It is these industries that many rural areas rely on for survival.

Such businesses depnd on short summer tourism seasons to gather most of their revenue. Evidence suggests that rural areas which depend heavily on tourism during summer months are further impacted when local trade is disturbed. Tourism and hospitality businesses are most disadvantaged by the prohibition of county-to-county travel as it makes it near impossible to attract overnight domestic tourism stays. Other challenges relate to businesses based on experience or outdoor activities which face high insurance premiums.

Covid-19 supports

Supports such as the TWSS and EWSS were cited as a massive support to short term survival during lockdowns. Commercial rates rebates resulted in some businesses clawing back around €10,000 annually.

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But rates rebates do not apply to all businesses. For example, events and adventure based businesses said that a usual annual turnover of around €300,000 has been reduced to €2,000. These businesses are further hampered by large insurance premiums, with many insurers not offering reductions in cover or business interruption supports.

During lockdowns, business owners availed of Business Continuity Vouchers through LEO to ascertain viability post Covid-19. Many disclosed that their business would become unviable without external cash flow support.

'Hopelessness'

Inequality of support during the first lockdown in March led to a feeling of "hopelessness" on the part of business owners. Evidence suggests that state and semi-state rural based organisations received significant support "bail outs".

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While the focus is inevitably on keeping rural enterprises viable, there are larger issues at play here. The social scars of the lockdown are greater. Some business owners told of the very personal challenge of not being able to afford Christmas gifts for children. The research found that family businesses showed a stronger resilience as family members were able to stay engaged in the company while not earning a salary. This is a luxury that isn't afforded by all rural businesses though, and highly qualified and skilled staff in marketing, culinary and other sectors became unemployed.

What will rural Ireland look like in 2025?

Rural businesses depend on referral and local networks to keep revenue in the locality. For example, rural events mean bookings for hotels, restaurants and B&Bs with large local economic boosts. A realisation at state level is required as to the interlinked nature of these businesses and how lack of revenue can result in widespread community failure.

Operators pleaded for continued efforts to support rural areas to allow businesses to remain open in future shutdowns. They argue that current loan based supports are not sufficient and will only increase hardship. Rural areas are the essence of our country and support measures to restart and maintain the viability of these businesses are urgently warranted. If they do not come we must ask: what will rural Ireland look like in 2025?

The views expressed here are those of the author and do not represent or reflect the views of RTÉ