Impact on SMEs after COVID-19
Unsurprisingly, coronavirus has put a huge strain on businesses of all kinds – small and medium-sized enterprises (SMEs) especially, and small businesses in particular.
A survey conducted by Simply Business in 2020 found that no region of the UK has been left unscathed, with some suffering more than others. In total, 3,700 small businesses were canvassed, with London, South East England, North East England and Scotland having suffered the most as a result of COVID-19.
As of June 2020, the least affected UK region was South West England, with an average loss of business income of approximately £11,000 – while the average losses of small businesses in London amounted to roughly £17,000.
The greater the losses, the more likely the closures
There’s a direct correlation between financial loss and closure, with 7% of small London businesses permanently closing and 2% of small South West England enterprises shutting their doors for good. And it’s worth bearing in mind that, at the time of writing, these figures are more than six months old; COVID-19 is still with us and we’ve undergone three lockdowns since the coronavirus was first identified.
Business as usual?
In terms of forward-planning, small-business optimism very much depends on which region of the UK your enterprise is located. Given what we’ve discussed already, it’s hardly surprising that South West England-based small businesses are the most hopeful, with 79% saying they plan to continue unabated. Meanwhile, 70% of London SMEs say the same thing.
England’s capital
London is, of course, the centre of small-business activity in the UK, and we’ve already noted that it has suffered most according to the Simply Business survey (although, there is one exception – see immediately below). Though permanent closures are at their highest rate in the English capital, the same can’t be said of temporary closures: 61% compared to a 67% national average. And 15% of small business owners in London have stated that they expect to start new businesses post-pandemic.
Wales
We haven’t mentioned Wales yet. That’s because of all UK regions, it tends to sit somewhere in the middle of the survey. However, when it comes to help from the government, small Welsh businesses have been the most vocal in terms of a perceived lack of government support. As many as 42% of Welsh SMEs canvassed said that they didn’t believe they were sufficiently supported by Westminster. At the other end of the scale, 33% of small South-East England businesses said the same thing.
What next?
While losses have been great, both financially and in terms of small-business closures, there remains optimism for life after COVID-19 [recovery]. All businesses have had to react quickly and think smarter – with many seizing the opportunity to embrace remote working. Of course, this isn’t an option for most bricks-and-mortar enterprises but nevertheless, retailers of all kinds have found ways to work within government health guidelines (designed to help protect employees and customers), while remaining viable.
It has often been said that coronavirus and lockdown represent the ‘new normal’. While by no means ideal, businesses have found ways to subsist, by turning challenges into opportunities. And once COVID-19 is substantial if not entirely vanquished, businesses will be in a stronger position to flourish.
For information on government support during the pandemic, please visit https://www.gov.uk/government/collections/financial-support-for-businesses-during-coronavirus-covid-19.
Looking for help with your SME? Talk to our Ilford accountants to find out how we can help you and your business grow.
