International Journal of Advanced Research in ISSN: 2278-6236

Management and Social Sciences Impact Factor: 7.624

FINANCIAL PERFORMANCE OF SMALL ENTERPRISES IN CAGAYAN AMIDST

COVID -19 PANDEMIC

ROWELL C. BUSTILLO
JOVELYN T. GUZMAN
MARY DIANE M. CORNELIO
CHRISTLEIYAN R. SIDDAYAO
JOANNA MARIE B. SACRAMENTO
Student-Researchers- Bachelor of Science in Accounting Information System
College of Business, Entrepreneurship and Accountancy
Cagayan State University-Andrews Campus
Tuguegarao City, Cagayan, Philippines

DR. RHODORA ROMERO

Research Adviser College of Business, Entrepreneurship and Accountancy
Cagayan State University-Andrews Campus
Tuguegarao City, Cagayan, Philippines

ABSTRACT: The global consequences of the COVID-19 pandemic are so serious, both in
terms of human lives and financial impact, that many of the world's most well-known brands
could go bankrupt entirely, as people all over the world, especially in developing countries,
are confined to their residences, causing a halt in economic activity (Tucker, 2020).
Enterprises are facing a variety of problems such as a decrease in demand, supply chain
disruptions, cancellation of export orders, raw material shortages, and transportation
disruptions, among others.The study aimed to assess the effect of Covid-19 pandemic on the
financial performance among small enterprises in Cagayan .The researchers used the
descriptive research design to explore and determine the effects of pandemic and difference
between financial performances of small enterprises. The respondents of the study were the
small enterprise owners from Cagayan and in which owners are dependent solely on the
enterprise.Purposive sampling was used by researchers in order to reach a certain group of
people utilizing a questionnaire. The data gathered were treated, tabulated and analyzed
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using the SPSS using frequency counts, percentages, mean and ranking. Based on the
foregoing findings, it is concluded that small business are the ones that were affected the
most with the lockdowns and movement restrictions. Small business has better financial
performance before the Covid-19 pandemic. This study concludes that if the much-needed
focus and assistance is given to small businesses in the industrial sector then such businesses
contend with problems and conditions of economic uncertainty may have thrived better. In
view of the findings of this study, it is therefore recommended thatpolicy makers should
foster programs that assist small businesses with these work strategies, which can help them
survive, enhance their stability and thereby also promote the economy’s ability to withstand
crisis situations and future researchers must also look at the comprehensive coping
strategies of small businesses to cope with the after effects of COVID-19.

KEYWORDS: cash flow, financial performance, small enterprises, pricing, profitability,

promotion, covid-19, pandemic

INTRODUCTION

The global consequences of the COVID-19 pandemic are so serious, both in terms of human
lives and financial impact, that many of the world's most well-known brands could go
bankrupt entirely, as people all over the world, especially in developing countries, are
confined to their residences, causing a halt in economic activity (Tucker, 2020). One such
example is the financial pressure faced by top US brands such as Donthu and Gustafsson,
(2020). Many enterprises are facing different problems with a certain degree of loss. In
particular, enterprises are facing a variety of problems such as a decrease in demand, supply
chain disruptions, cancellation of export orders, raw material shortages, and transportation
disruptions, among others. It is very evident that the major victims of the COVID-19
outbreak are micro, small, and medium-sized enterprises (MSMEs). As a result, MSMEs,
compared to large enterprises, typically do not have adequate resources (Bartik et al., 2020;
Prasad et al., 2015)

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The lockdown imposed by governments around the world to prevent the spread of COVID-
19 has resulted in a reduction in economic activity at all levels as people are unable to avail
services like taxis, hairdressing, etc. The manufacturing industries, such as electronics and
automobiles, were unexpectedly closed at first, which caused major disruption in the
production process, even though they reopened approximately 60 days after the closure.
The debate regarding the unexpected closure is endless. But the main questions related to
the welfare of the employees, the level of contingency planning, and the preparedness of
the companies to cope with such situations. The role of companies and even countries in
exploiting the situation to their benefit, as is the case of Chinese companies and
governments since they are acquiring European centered infrastructure and technology
(Rapoza, 2020; Salman &Munir, 2012; Salman & Qamar, 2011). Shen et al. (2020) showed
that the COVID-19 pandemic had a significant negative impact on the performance of listed
Chinese companies due to a decrease in the value of total revenue, which also affected the
decrease in ROA.

Based on UNCTAD (2020), it’s been estimated that the pandemic will trigger a 5%–15% drop
in global foreign direct investment. The world needs a support package of up to $2.5 trillion
to cope with the damage. Hence, based on these statistics, the current global crisis will likely
be worse than the 2008 crisis. Almost 90% of the airline industry employees have been laid
off. Hotels are operating at 20% of their normal capacity. The tourism and travel industries
are bound to suffer financially. All the social events, such as sporting, cultural, music
concerts, etc., that hosted large gatherings have been closed off indefinitely (Bagnera,
Steinberg, and Edition 2020).

In an article written by the International Labour Organization, (2020); World Health

Organization, (2020), as of August 2020, more than twenty million people had been infected
worldwide, and about 300 million full-time workers had lost their jobs or had their hours
and salaries reduced due to lockdown measures. The pandemic has affected employment,
investment, and growth prospects, and may result in permanent changes in consumption
and work patterns (Baldwin &Weder di Mauro, 2020; Barrero et al., 2020; Barua, 2020;
Coibion et al., 2020; Reeves et al., 2020)

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Many small businesses are expected to close as a result of social distancing constraints and
market changes brought about by COVID-19. According to the 2018 results of the Census of
Philippine Business and Industries (CPBI) Phase 1, the number of active business owners in
the Cagayan Valley Region was 30,751, or 3.1 percent of the country’s 1,003,111 List of
Establishments (LE). But the decline in company owners was the biggest on record, with
losses affecting almost every industry and even incorporated companies. Policy mandates
and downward market movements have forced the closure of stores, warehouses, and a
slew of other businesses. Because of the inability to cover continuing bills and endure the
shutdown, many of these closures may be coronavirus, which has caused unprecedented
store and company closures not only in the Cagayan Valley but also all over the world.

At the end of this study, the researchers were able to answer these hypothetical questions.
How did small businesses adjust to the economic disruptions resulting from COVID-19? And
how might alternative policy proposals impact businesses and employment resilience

STATEMENT OF THE PROBLEM

The study aimed to assess the effect of Covid-19 pandemic on the financial performance
among small enterprises in Cagayan. Specifically, it sought to answer the following
questions:
1. What is the profile of the small enterprise as to:
a. type of business
b. number of employees
c. number of years in operation
d. average monthly income before the pandemic
e. average monthly income during the pandemic
f. initial capitalization
g. source of capital
2. What is the performance of small enterprises before the pandemic in terms of:
a. cash flow

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b. profitability
3. What is the performance of small enterprises during the pandemic in terms of:
a. cash flow
b. profitability
4. What are the problems encountered by the business in their financial
performance during the pandemic?
5. What are the strategies employed by the management to adapt to the pandemic
in terms of:
a. pricing
b. promotion
6. What is the level of effectiveness of their strategies during the pandemic in terms
of pricing and
promotion?
7. Is there a significant difference in the performance of small enterprises when
grouped according
to profile variables?
8. Is there a significant difference on the level of effectiveness of their strategies
when grouped
according to their profile variables?
9. Is there a significant difference between the performance of small enterprises
before and during
the pandemic in terms of cash flow and profitability?

HYPOTHESES

This study was guided by the following hypotheses:

1. There is no significant difference in the performance of small enterprises when
grouped according to profile.
2. There is no significant difference on the level of effectiveness of their strategies
when grouped according to their profile variables.

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3. There is no significant difference in performance of small enterprises before and

during the pandemic in terms of cash flow and profitability

RESEARCH METHODOILOGY AND STATISTICAL TOOLS

The researchers used the descriptive research design to explore and determine the effects
of pandemic and difference between financial performances of small enterprises. The
respondents of the study were the small enterprise owners from Cagayan and in which
owners are dependent solely on the enterprise. The researchers used a purposive sampling
technique based on the DTI data bank according to municipalities. Purposive sampling is
used by researchers in order to reach a certain group of people, as all survey participants
are chosen because they meet a specific profile. The study used survey questionnaire to
gather the data needed. The questionnaire consists of two parts. The first part of the
questionnaire is composed of the demographic profile of the respondents. Part two of the
tool corresponds to a numerical value to assess the level of financial performance and
effects of the pandemic on the respondents.

The researcher used SPSS to tabulate the data that had been gathered. The number of
respondents who fall into each of the profile factors, as well as the breakdown of their
responses in percent, was determined by obtaining the frequency counts. Getting the mean
also determines the average cash flow and profit of small enterprises before and after the
pandemic, which is a suitable technique to use because it allows researchers to compare the
average movement of money into and out of the business and assess how profitable the
owner's funds have been used. Before and after the pandemic, the study evaluated if the
small enterprises have enough cash to run their operations and finance their expansion. The
major challenges faced by company owners during the epidemic, as well as the solutions
they utilized to adapt to the crisis, was identified using rankings. Paired Sample t-test was
used to identify the difference between the cash flow and profitability before and during
the pandemic. This instrumentation is used as the variables has the same subject. The t-test
is used for profile variables with two groups and one-way Analysis of Variance (ANOVA) to

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see if there is a significant difference in the performance and strategies of small businesses
when they are categorized according to profile factors.

RESULTS OF FINDINGS

Table 1.1: Frequency and Percentage of the Small Enterprises as to Type of Business
Type of Business Frequency Percentage
Merchandising 19 33.33%
Service 28 49.12%
Manufacturing 8 14.04%
Hybrid 2 3.51%
Total 57 100.00%
Table 1 shows the frequency and percentage distribution of small enterprises as to type of
business. Among the 57 respondents, 28 of them are service businesses, representing
49.12%. Followed by respondents who are merchandising with a frequency of 19 and
manufacturing with a frequency of 8, representing 33.33% and 14.04%, respectively, only 2
of them are hybrid businesses, representing 3.51%.

Table 1.2: Frequency and Percentage of the Small Enterprises as to Number of Employees
Number of Employees Frequency Percentage
10-49 54 94.74%
50-99 3 5.26%
Total 57 100.00%
Table 1.2 shows that among the 57 respondents in the frequency and percentage
distribution of small enterprises as to number of employees, 54 have 10–49 employees,
which represents 94.74%, and only 3 businesses have 50–99 employees, which represents
5.26%.

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Table 1.3: Frequency and Percentage of the Small Enterprises as to Years of Operation
Years of Operation Frequency Percentage
10 years above 22 38.60%
6 to 10 32 56.14%
5 Years and Below 3 5.26%
Total 57 100.00%
Table 1.3 shows the years of operation of the 57 respondents, whereas businesses that have
been operating for the years 2011-2015 have the highest percentage, with 32 businesses
representing 56.14%. Second are businesses that are operating in the years 2010 and below,
which consist of 22 businesses representing 38.60%, and lastly, businesses that have started
operating since 2016 and above, which has 3 businesses representing 5.26%, respectively.

Table 1.4: Frequency and Percentage of the Small Enterprises in terms of Average Monthly
Income before the Pandemic
Average Monthly Income before thePandemic Frequency Percentage
1000-50000 0 0
50001-100000 29 50.88%
100001-150000 9 15.79%
150001-200000 7 12.28%
200001-250000 4 7.02%
250001-300000 2 3.51%
300001-350000 1 1.75%
350001-400000 3 5.26%
400001-450000 0 0%
450001 and above 2 3.51%
Total 57 100.00%
Table 1.4 states the frequency and percentage distribution of the small enterprises in terms
of average monthly income before the pandemic. There were no respondents who had a
monthly income amounting to 1000-50000. Meanwhile, there are 29 respondents who have

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a monthly income of 50001–100000, representing 50.88%, followed by 9 respondents who

have a 100001–150000 monthly income, representing
15.79% of the total respondents. There are also 7 respondents who have a 150001– 200000
monthly income at 12.28%. Monthly income of 200001-250000 has a frequency of 4,
250001–300000 at 2, 300001–350000 at 1, and monthly income of 350001-400000 at a
frequency of 3, representing 7.02%, 3.51%, 1.75%, and 5.26%. Lastly, there are no
respondents who have a monthly income of 400001-450000 and 2 have a monthly income
of 450001 and above, representing 3.51%.

Table 1.5: Frequency and Percentage of the Small Enterprises in terms of Average Monthly
Income during the Pandemic

Average Monthly Income during the Pandemic Frequency Percentage

1000-50000 19 33.33%

50001-100000 18 31.58%

100001-150000 6 10.53%

150001-200000 7 12.29%

200001-250000 1 1.75%

250001-300000 2 3.51%

300001-350000 1 1.75%

350001-400000 1 1.75%

400001-450000 0 0%

450001 and above 2 3.51%

Total 57 100%
Table 1.5 states the average monthly income of small enterprises during the pandemic at
frequency and percentage distribution. Among the 57 respondents, 19 businesses have a
monthly income of 1000-50000 which represents 33.33%. 18 businesses have a monthly
income of 50001-100000 representing 31.58%. The following are businesses with a monthly
income of 100001-150000, comprising 6 businesses, 150001–200000 monthly income at 7

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businesses, 2500001-300000 at 2 businesses representing 10.53%, 12.29%, 1.75%

respectively. Monthly income of 200001-250000, 300001-350000 and 350001-400000 all
have the same frequency at only 1 business representing 1.75%. There is no business having
a monthly income of 400001-450000 and there are 2 businesses having a monthly income of
450001 and above that represent a
3.51%.

Table 1.6: Frequency and Percentage of the Small Enterprises as to Initial Capital
Initial Capital Frequency Percentage
3000001 to 6000000 34 59.65%
6000001 to 9000000 16 28.07%
9000001 to 12000000 7 12.28%
12000001 to 15000000 0 0.00%
Total 57 100.00%
Table 1.6 states the frequency and percentage distribution of small enterprises as to initial
capital as to which 3000001 to 6000000 has 34 frequencies, resulting in 59.65%. Followed
by 6000001 to 9000000 which has a frequency of 16 at 28.07% and 9000001 to 12000000 at
7, representing 12.28%. There is no business among the 57 respondents who have an initial
capital of 12000001 to 15000000.

Table 1.7: Frequency and Ranking of the Small Enterprises as to Source of Fund
Source of Fund Frequency Ranking
Savings 44 1
Bank Loans 30 2
Partnership Funding 4 3
Table 1.7 shows the frequency and ranking of small enterprises as to sources of funding.
Savings is the highest, which comprises 44 businesses, followed by bank loans, which
comprises 30 businesses. Partnership funding has the least number of respondents,
amounting to four businesses only.

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Table 2.1: Cash Flow Performance of small enterprises before the pandemic
Mean SD Descriptive rating
The business is taking in more cash than its spending 4.26 0.791 Strongly Agree
The business has sufficient cash to 4.11 0.958 Agree
manage its operations.
The business generates cash very well to fund its 4.33 0.715 Strongly
operating expenses and to pay its liabilities. Agree
Category mean 4.23 0.82 Strongly Agree
Table 2.1 states the cash flow performance of small enterprises before the pandemic,
wherein businesses that take in more cash than they spend have been strongly agreed upon
by respondents with a mean of 4.26 and a standard deviation of 0.791. Also, respondents
with a mean of 4.11 and a standard deviation of 0.958 have agreed to work for businesses
that have sufficient cash to manage their operations. Businesses that generate cash very
well to fund their operating expenses and pay their liabilities have been strongly agreed
upon by respondents with a mean of 4.33 and a standard deviation of 0.715. And lastly, the
average of the said category has respondents with a mean of 4.23 and a standard deviation
of 0.82 with "strongly agree" as its descriptive rating.

Table 2.2: Profitability Performance of small enterprises before the pandemic

Mean SD Descriptive rating
The business was able to increase production, 4.39 0.796 Strongly Agree
which resulted in increased sales and profitability.
The business efficiently used its resources to 4.04 0.865 Agree
generate revenues in excess of its expenses.
The business ability to produce a return on 4.12 0.847 Agree
investment based on its resources was good.
Category mean 4.18 0.836 Agree
Table 2.2 represents the profitability performance of small enterprises before the pandemic,
whereas businesses that were able to increase production, which resulted in increased sales
and profitability, and businesses that efficiently used their resources to generate revenues
in excess of their expenses have a descriptive rating of "strongly agree" for the prior and

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―agree‖ on the rest with a mean of 4.39 and 4.04 and a standard deviation of 0.795 and
0.865, respectively. Businesses who have the ability to produce a return on investment
based on their resources felt that this has also been agreed upon by respondents who have
a mean of 4.12 and a standard deviation of 0.847. The descriptive rate of the overall
category is agreed upon by respondents with a mean of 4.18 and a standard deviation of
0.836.

Table 3.1: Cash Flow Performance of small enterprises during the pandemic
Mean SD Descriptive rating
The business is taking in more cash than its spending. 2.74 1.142 Neutral
The business has sufficient cash to manage 2.70 0.925 Neutral
its operations.
The business generates cash very well to fund its 2.74 0.992 Neutral
operating expenses and to pay its liabilities.
Category mean 2.73 1.020 Neutral
Table 3.1 illustrates the performance of small enterprises during the pandemic in terms of
their cash flow. Respondents who have a mean of 2.74 and a standard deviation of 1.142
have a descriptive rating of neutral in the category wherein business is taking in more cash
than its spending. Same goes with business has sufficient cash to manage its operations,
whereas respondents who are neutral about this category have a mean of 2.70 and a
standard deviation of 0.925. Business generates cash very well to fund its operating
expenses and pay its liabilities, with respondents who are neutral at a mean of 2.74 and a
standard deviation of 0.992. The category mean has a descriptive rate of neutral with
respondents at a mean of 2.73 and a standard deviation of 1.20.

Table 3.2: Profitability Performance of small enterprises during the pandemic

Mean SD Descriptive rating
The business was able to increase production, which
resulted in increased sales and profitability. 2.81 0.99 Neutral
The business efficiently used its resources to generate 2.82 0.947 Neutral

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revenues in excess of its expenses.

The business ability to produce a return on investment
based on its resources was good. 2.74 0.955 Neutral
Category mean 2.79 0.964 Neutral
Table 3.2 illustrates the profitability performance of small enterprises during the pandemic
as to where businesses were able to increase production, which resulted in increased sales
and profitability, businesses efficiently used their resources to generate revenues in excess
of their expenses, and businesses' ability to produce a return on investment based on their
resources was good. They were all at a descriptive rate of neutral and had a mean of 2.81,
2.82, and 2.74 and a standard deviation of 0.99, 0.947, and 0.955 respectively. The overall
descriptive rate of the category is neutral, meaning that respondents have a mean of 2.79
and a standard deviation of 0.964.

Table 4: Problems encountered by the Small Enterprises in their Financial Performance

during the Pandemic

Problems Encountered Frequency Ranking

Reduction in profits 40 1

Decrease in demand 38 2

Reduction in sales 26 3

Temporary business closure 21 4

Supply chain disruption 18 5

Table 4 represents the problems encountered by small enterprises in their financial
performance during the pandemic. A majority of the respondents have struggled with a
reduction of profits, comprising 40 businesses. Second is a decrease in demand, which
affected 38 businesses, followed by 26 businesses that encountered a reduction in sales.
Then there were 21 businesses that had temporary business closures. Lastly, supply chain
disruption has been the least encountered problem among 18 businesses.

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Table 5.1: Strategies Employed by the Management to adapt to the pandemic in terms of
Pricing
Pricing Strategies Frequency Ranking

Competitive pricing 35 1

Discount pricing 33 2

Cost-plus pricing 16 3

Bundle pricing 10 4

Value-based pricing 9 5

Price skimming 2 6

Odd-even pricing 1 7

Table 5.1 shows the strategies employed by the management to adapt in terms of pricing.
Among the 57 respondents, most of them have implemented competitive pricing, which
comprises 35 businesses. Discount pricing comes second with 33 businesses, then cost-plus
pricing with 16 businesses, bundle pricing with 10 businesses, value-based pricing with 9
businesses, and price skimming with 2 businesses. Odd-even pricing is the least
implemented strategy, which comprises only 1 number of respondents.

Table 5.2 Strategies employed by the management to adapt to the pandemic in terms of
Promotion
Promotion Strategies Frequency Ranking

Discounts 38 1

Online Promotion 23 2.5

Running exclusive deals and offer 23 2.5

Refer-a-friend scheme 17 4.5

Buy 1 Take 1 17 4.5

Offer new products and services 9 6

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Run a Competition 7 7

Giveaways or free samples 4 8

Free delivery to nearby places 0 9

Table 5.2 states the strategies employed by the management to adapt to the pandemic in
terms of promotion. Majority of the respondents implemented discounts, which comprise
38. Followed by Online promotion the same with running exclusive deals and offers both at
23. Refer-a-friend scheme and buy 1 take 1 were also implemented by businesses having
the same frequency of 17. Next is offering new products and services at a frequency of 9
and running a competition at a frequency of 7. There are 7 businesses that implemented
giveaways or free samples, but there is no respondent who implemented free delivery to
nearby places.

Table 6: Level of Effectiveness of Strategies employed by the management during the

pandemic in terms of Pricing and Promotion
Mean SD Descriptive rating
The pricing strategies employed were 3.61 0.75 Agree
effective.
The promotional strategies employed 3.46 0.709 Agree
delivered expected results
Positive customer feedback was received. 3.68 0.76 Agree
The business attracts more engagement from customers 3.58 0.801 Agree
There is a demand increase in the business. 3.32 0.76 neutral
The sales of the business increases 3.32 0.711 neutral
The profit of the business increases 3.23 0.78 neutral
The financial aspect of the business is in good shape. 3.18 0.826 neutral
The business has stable and/or sufficient earnings during 3.09 0.872 neutral
the pandemic.
Category mean 3.39 0.774 neutral
Table 6 shows the effectiveness level of strategies employed by the management during the
pandemic in terms of pricing and promotion. The respondents who agreed that the pricing

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strategies employed were effective had a mean of 3.61 and a standard deviation of 0.75. A
mean of 3.46 and a standard deviation of 0.709 indicated that respondents agreed in terms
of whether the promotional strategies employed had delivered expected results. The
respondents who also agreed with receiving positive customer feedback had a mean of 3.68
and a standard deviation of 0.76. Business attracts more engagement from customers, as
agreed by respondents with a mean of 3.58 and a standard deviation of 0.801. Both
respondents are neutral to a demand increase in a business and an increase in the sales of a
business with the same mean of 3.32 and a standard deviation of 0.76 and 0.711,
respectively. The respondents who are neutral about the financial aspect of the business,
which is in good shape, have a mean of 3.18 with a standard deviation of 0.826. Then
respondents, with a mean of 3.09 and a standard deviation of 0.872, were also neutral on
their businesses' having stable and/or sufficient earnings during the pandemic. Lastly, the
category mean has a descriptive rating of neutral among respondents, with a mean of 3.39
and a standard deviation of 0.774.

Table 7.1. Significant difference in the performance of small enterprises according to Type
of Business
F P-value Decision

Cash Flow Before Pandemic 0.035 0.965 Do not reject Ho

Cash Flow During Pandemic 4.516 0.015* Reject Ho

Profitability Before Pandemic 1.565 0.218 Do not reject Ho

Profitability During Pandemic 4.924 0.011* Reject Ho

*Significant Difference
Table 7.1 represents the significant difference in the performance of small enterprises
according to type of business. Using Analysis of Variance (ANOVA), it shows that before the
pandemic, there is significant difference in cash flow and profitability during the pandemic
among types of business, with P-value analysis of 0.015<0.05 and 0.011<0.05 respectively.
On the other hand, there is no significant difference cash flow and profitability before the
pandemic among types of business.

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Table 7.2: Significant difference in the performance of small enterprises according to

Number of Employees
P-value Decision
Cash Flow Before Pandemic 0.794 Do not reject Ho
Cash Flow During Pandemic 0.794 Do not reject Ho
Profitability Before Pandemic 0.355 Do not reject Ho
Profitability During Pandemic 0.303 Do not reject Ho
Using t-test, table 7.2 shows that there is no significant difference in the performance of
small enterprises according to the number of employees. In order to accept the null
hypothesis, the p-value should be greater than 0.05. With the table presented, 0.794>0.05
for cash flow before pandemic, 0.794>0.05 for cash flow during pandemic, 0.305>0.05 for
profitability before pandemic, and 0.303>0.05 for profitability during pandemic. The result
shows that the null hypothesis is accepted.

Table 7.3: Significant difference in the performance of small enterprises according to

Number of Years of Operation
F P-value Decision
Cash Flow Before Pandemic 0.062 0.94 Do not reject
Ho
Cash Flow During Pandemic 0.053 0.948 Do not reject
Ho
Profitability Before Pandemic 0.362 0.698 Do not reject
Ho
Profitability During Pandemic 2.917 0.063 Do not reject
Ho
Table 7.3 represents a significant difference in the performance of small enterprises
according to the number of years of operation. The result shows that the null hypotheses
should be accepted. Using ANOVA, the p-value of the variables are greater than 0.05 which
qualifies not to reject the null hypothesis, meaning there is no significant difference in the
performance of small enterprises according to the number of years of operation.

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Table 7.4: Significant difference in the performance of small enterprises according to

Average Monthly Income before Pandemic
F P-value Decision
Cash Flow Before Pandemic 1.274 0.276 Do not reject
Ho
Cash Flow During Pandemic 1.156 0.344 Do not reject
Ho
Profitability Before Pandemic 1.118 0.369 Do not reject
Ho
Profitability During Pandemic 1.124 0.365 Do not reject
Ho
Table 7.4 represents a significant difference in the performance of small enterprises
according to average monthly income before pandemic. The result shows that the null
hypotheses should be accepted. Using ANOVA, the p-value of the variables are greater than
0.05 which qualifies not to reject the null hypothesis, meaning there is no significant
difference in the performance of small enterprises according to average monthly income
before the pandemic.

Table 7.5: Significant difference in the performance of small enterprises according to

Average Monthly Income during Pandemic
F P-value Decision
Cash Flow Before Pandemic 1.703 0.13 Do not reject
Ho
Cash Flow During Pandemic 2.167 0.054 Do not reject
Ho
Profitability Before Pandemic 1.748 0.12 Do not reject
Ho
Profitability Before Pandemic 2.814 0.015* Reject Ho
*Significant Difference
Table 7.5 represents a significant difference in the performance of small enterprises
according to average monthly income during pandemic. The result shows that the null

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hypothesis should be accepted on cash flow before and during pandemic and profitability
before pandemic. Using ANOVA, the p-value of the variables are greater than 0.05 which
qualifies not to reject the null hypothesis, meaning there is no significant difference in the
performance of small enterprises according to average monthly income before the
pandemic, except for profitability during income. It shows that there is a significant
difference with a p-value analysis of 0.015<.05 reject the null hypothesis.

Table 7.6 Significant difference in the performance of small enterprises according to Initial
Capitalization
F P-value Decision
Cash Flow Before Pandemic 2.312 0.109 Do not reject
Ho
Cash Flow During Pandemic 1.178 0.316 Do not reject
Ho
Profitability Before Pandemic 0.853 0.432 Do not reject
Ho
Profitability Before Pandemic 3.703 0.031* Reject Ho
*Significant Difference
Table 7.6 represents significant differences in the performance of
small
enterprises according to initial capitalization. The result shows that the null hypothesis
should be accepted on cash flow before and during pandemic and profitability before
pandemic. Using ANOVA, the p-value of the variables are greater than 0.05 which qualifies
not to reject the null hypothesis, meaning there is no significant difference in the
performance of small enterprises according to average monthly income before pandemic
except for profitability during pandemic. It shows that there is a significant difference with a
p-value analysis of 0.031<.05 reject the null hypothesis.

Table 8.1 Significant difference in the level of effectiveness of their strategies when
grouped according to their profile variables

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P-value Decision
Type of Business 0.113 Do not reject Ho
Number of Employees 0.178 Do not reject Ho
Years of operation 0.014* Reject Ho
Average Monthly Income Before Pandemic 0.379 Do not reject Ho
Average Monthly during Pandemic 0.045* Reject Ho
Initial Capital 0.166 Do not reject Ho
*Significant Difference
The table shows the result for significant difference in the level of effectiveness of their
strategies when grouped according to their profile variables. It shows that with t-test
analysis for years of operations and average monthly income during pandemic with p-value
of 0.014<0.05 and 0.045<0.05, respectively, the null hypothesis should be rejected, meaning
there is a significant difference between the two variables. On the other hand, there is no
significant difference in the level of effectiveness of their strategies among type of business,
number of employees, average monthly income during pandemic and
initial capital.

Table 9: Test for significant difference in the financial performance before and during
pandemic
Mean T P-value Decision
Cash Flow Before Pandemic 1.474 8.317 .000* Reject Ho
Cash Flow During Pandemic
Profitability Before Pandemic 1.391 7.951 .000* Reject Ho
Profitability During Pandemic
*Significant Difference paired sample test
Table 9 results show that there is a significant difference between the financial performance
of small enterprises before and during pandemics. Paired sample test was used to analyze
the data. In order to accept the null hypothesis, the p-value should be greater than 0.05.
However, the table shows that the p-value is less than 0.05, which is 0.000<0.05 for cash
flow and 0.000<0.05 profitability, respectively. Thus, the cash flow and profitability
performance of small businesses during pandemic has a significant
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difference.

DISCUSSION/ANALYSIS OF DATA

Covid-19 has already been harsh in the economy which has affected the lives of the people
(Baldwin &Weder di Mauro, 2020). Great downfall in the statistics for economy and financial
performances of companies including the micro to medium scale. Many small businesses
temporarily closed or, at worst, closed permanently (Dua et al, 2020). This study shows that
there is a significant difference in the financial performance of small businesses before and
during the pandemic. This study shows that before the pandemic small businesses had more
capacity for cash flow and were more profitable compared during the pandemic (Al-Haddad
et al, 2020). Moreover, significant differences on financial performance vary among profile
variables. There are significant differences also in the level of effectiveness of strategies
implemented according to years of operation and average monthly income. On the other
hand, there are no significant differences on the other profile variables.

LEVEL OF EFFECTIVENESS OF STRATEGIES IMPLEMENTED

This study shows that the effectiveness of the strategies implemented by small business is
neutral collectively speaking, meaning the implementation of the strategies are
unidentifiable if it is effective or not. Reasons could be that the economy at the moment is
unpredictable and that small business cannot formulate coping strategies to make it more
effective (Otache, 2020). In specification, business owners agreed that the pricing strategies
employed were effective also with positive customer feedback and business attracts more
engagement from customers. (Cohen et al, 2020). This study also shows that price discount
is the most used strategy among small business. Therefore, it could be assessed that
business owners agreed that price strategies are effective because of the latter. On the
other hand, small enterprise owners were neutral in terms of promotional strategies
implemented and delivered expected results, there is a demand increase in the business,
the sales of the business increases, the profit of the business increases, the financial aspect
of the business is in good shape. the business has stable and/or sufficient earnings during
the pandemic.

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SIGNIFICANT DIFFERENCE IN THE FINANCIAL PERFORMANCE OF SMALL BUSINESSES

ACCORDING TO PROFILE VARIABLES

Small enterprises were grouped according to type of business, number of employees, years
of operation, and average monthly income before the pandemic, average monthly income
during the pandemic and initial capitalization. The study shows that there is no significant
difference in financial performance particularly cash flow and profitability before the
pandemic when small enterprises are grouped according to type of business which are
merchandising, service, manufacturing and hybrid. On the contrary, there is significant
difference in financial performance particularly cash flow and profitability during covid-19
pandemic when small enterprises are grouped according to type of business. The study
shows that there is no significant difference in financial performance particularly cash flow
and profitability before and during the pandemic when they are grouped according to the
number of employees. Same results when grouped according to years of operation and
average monthly income, there is no significant difference in financial performance. On the
other hand, this study shows that there is significant difference in profitability during covid-
19 pandemic when grouped according to average monthly income during covid-19
pandemic and initial
capitalization.

SIGNIFICANT DIFFERENCE IN THE LEVEL OF EFFECTIVENESS OF THEIR STRATEGIES WHEN

GROUPED ACCORDING TO THEIR PROFILE VARIABLES

This study also examined the significant difference in the level of effectiveness of their
strategies when grouped according to their profile variables. The profile variables indicated
are type of business, number of employees, years of operation, average monthly income
before the pandemic, average monthly income during the pandemic, and initial
capitalization. The study shows that there is significant difference in the level of
effectiveness of the strategies implemented according to years of operation and average
monthly income during covid-19 pandemic. The result may be affected by year of

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establishment. The longevity of the establishment or enterprise affects the years of

experience of implementation (Bates, 1990). Moreover, with the drastic change because of
the pandemic, results are affected compared to the era before covid-19 struck the
economy. For profile variables such as type of business, number of employees, average
monthly income before the pandemic and initial capitalization, findings show that there is
no significant differences in the level of effectiveness.

Significant Difference in the financial performance of small businesses before and during
pandemic
This study reveals that small businesses’ financial performance in Cagayan are significantly
different. The cash flow and profitability of small businesses are better before the pandemic
than during the pandemic (Paryanti, Tejaningsih &Yuniarti, 2020). The pandemic caused
great negative effects to small business owners. Many are still operational but some do
temporarily close. Across the different profile variables such as type of business, number of
employees, years of operation, average monthly income before and during covid-19
pandemic and initial capitalization there is a significant difference in their cash flow
performance and profitability.

CONCLUSIONS

Based on the foregoing findings, it is concluded that small business are the ones that were
affected the most with the lockdowns and movement restrictions. Small business has better
financial performance before the Covid-19 pandemic. This study concludes that if the much-
needed focus and assistance is given to small businesses in the industrial sector then such
businesses contend with problems and conditions of economic uncertainty may have
thrived better.

RECOMMENDATIONS

In view of the findings of this study, it is therefore recommended that

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1. Policy makers should foster programs that assist small businesses with these work
strategies, which can help them survive, enhance their stability and thereby also
promote the economy’s ability to withstand crisis situations.
2. Small enterprises must have their crisis planning for the business to survive their
operation amidst any adversities.
3. Small enterprises must look for a good business insurance as their back up provider
in case of crisis.
4. For researchers who would like to replicate and further study the financial
performance of small businesses in Cagayan amidst COVID-19, the researchers of
this study suggest to look further into the different aspects and dimensions of
financial performance, such as working capital ratio, quick ratio, debt-equity ratio,
price-earnings ratio, and return on equity ratio
5. Future researchers must also look at the comprehensive coping strategies of small
businesses to cope with the after effects of COVID-19.

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