UK SMEs worry they won’t survive another lockdown
Sep 9, 2020
Almost one-fifth of SMEs don’t think they’d survive another lockdown and would be forced to stop trading permanently if one came into effect, according to a new report by small business insurer Simply Business.
The study spoke to more than 500 SME owners across the UK and also found that a third (32 percent) feel they’d be impacted worse than the first lockdown but would survive, however, a further third (34 percent) stated that they feel a second lockdown would have the same impact as the first and just 5 percent think they would cope better than the first.
When looking at business recovery, around a quarter (24 percent) of businesses think it will take 12-18 months to recover the money lost during Covid-19, while one in five (19 percent) think 6-12 months and one in 10 (12 percent) think 18-24 months. A further tenth (12 percent) think it could take 2-3 years.
In terms of customer numbers, the report found that a quarter (24 percent) of small businesses also believe it will take between 6-12 months for their customer numbers to return to normal, while well over a tenth (14 percent) think it could be over a year.
Alan Thomas, UK chief executive at Simply Business, said in a statement: “The nationwide lockdown has had a significant effect on all businesses – from the very largest to the smallest. And our research has highlighted the potentially fatal impact that further lockdowns could have on many small businesses in the UK.
“Few have been financially harder hit than SMEs, small businesses, and the self-employed, and it’s telling that many live in fear of another lockdown and the consequences it would have on their business.”
Simply Business launches Business Boost grant for SMEs
The research did reveal some encouraging news that 68 percent of small business owners expect their employee numbers to remain the same. However, one in five (21 percent) expect it to decrease, the majority of which (13 percent) said that they expect it to decrease significantly, putting a risk to employment levels across SMEs.
When it comes to business confidence, the report shows that 62 percent of SME owners feel less confident about the long-term prospects of their business, adding that the majority do, however, feel comfortable about resuming trading whilst adhering to government guidelines. Within this, 43 percent said they were ‘comfortable’ and a further 30 percent noted ‘very comfortable’.
Technology has arguably had the biggest impact on survival, with 42 percent stating that they are more reliant on technology now because of coronavirus. Just under half (47 percent) saying that they are using messaging apps more, such as Facebook Messenger or Whatsapp for business, while a third (33 percent) have increased their use of social media, 36 percent have introduced contactless or online payment systems, and a quarter (25 percent) have started to use online delivery services.
Other positives to come out of lockdown, includes a quarter (25 percent) of SME owners saying their staff have learnt new skills, while one in five (21 percent) have found new customers, and almost one-fifth (17 percent) have even expanded to offer more products or services.
Thomas added: “It’s promising to see the level of resilience and innovation in the small business community – the greater adoption of technology and learning of new skills is a real positive and bodes well for the future.
“However, whilst business owners are innovating, they are still reliant on macro-economic policy. Government’s decision to implement local lockdowns could decide the fate of many small businesses. SMEs account for 99 percent of all UK businesses and contribute a combined 2 trillion pounds annually. Put simply, we need small businesses to bounce back if we’re to recover economically.”
To help SMEs survive during the coronavirus pandemic, Simply Business has launched a 10,000 pounds Business Boost grant, which will be granted to one entrepreneur to help them start or revive their business by “providing a financial boost, and potentially a lifeline, in these economically challenging times".
Small business owners have until September 28 to apply for the Business Boost grant on the Simply Business website. The commercial insurance company will then announce a shortlist of 12 businesses on October 9, before the winner is announced in early November.