Coronavirus has had a significant impact on all types of businesses ‘ but it’s clear small businesses and the self-employed have been hit harder than most.
With 67 per cent saying that they’ve had to stop trading at some point in the past six months, Covid-19 will cost the average small business owner over £11,000 on average. For small businesses in the hospitality industry, that figure jumps to over £21,000.
These are significant sums of money. And when you consider that there are over 5.8 million SMEs in the UK, the total cost of Covid-19 to small firms could exceed £69 billion.
At Simply Business, we provide insurance to over 400,000 small businesses ‘ from plumbers to accountants to dog walkers. This means we’ve witnessed first-hand the impact of the pandemic on countless self-employed people.
With just 56 per cent of small business owners saying they’ve successfully been able to access government support, a third (35%) have needed to borrow money from friends or family. Others have had to rely on credit cards (22%), and wider or private bank loans (8%).
The financial burden of Covid-19 is weighing heavily on their shoulders. Concerns about repaying friends and family, or loans, means that more than one in three are worried about running out of money. More than one in 10 fear bankruptcy.
It’s estimated that 234,000 SMEs have already permanently ceased trading since the start of the pandemic. Behind each of these businesses is an entrepreneur whose big dream has been shattered. Meanwhile, many will have employed people whose livelihoods have been plunged into uncertainty. Each of these business closures represents a loss to our economy, but also to our local communities too.
And it’s clear that further challenges lie ahead. Many still fear that their business is at risk of permanent closure, while 48 per cent think it will take over a year to recover financially. More than six months since the first nationwide lockdown was imposed, one in five believe that their business wouldn’t survive another.
But what’s also abundantly clear is that if the UK is to recover quickly, we need small businesses to bounce back.
SMEs account for 99 per cent of all UK businesses, and contribute a combined £2 trillion annually to the economy. They’re also responsible for 60 per cent of all employment, with 48 per cent coming from small and micro businesses. With many at risk of permanent closure, so much is at stake for our local communities and the wider economy.
Thankfully, small business owners have always shown themselves to be creative, resourceful and resilient. And it’s encouraging to know that despite the countless challenges of the last six months, 85 per cent intend to remain self-employed ‘ with 10 per cent even planning to start new businesses.
The pandemic has forced all businesses to pivot ‘ whether that’s in the service or product they’re offering, or in the way they work. This is certainly true for Simply Business, where we helped our 750 people transition to remote working almost overnight, so we could be there for our customers when they needed us most.
But for small businesses, the challenge has been unique, and the creativity we’ve witnessed has been astonishing ‘ as so many created new websites, offered unique services, and made use of existing expertise in unexplored areas.
In our survey of small business owners earlier this year, many spoke of the opportunity to adapt, and the expertise acquired in this period will have long-term benefits. One in four mentioned that they’d been able to learn new skills, while 17 per cent said their business has now expanded to offer new products or services.
We’ve also seen a shift in the adoption of and reliance on technology. Something which, again, will no doubt prove beneficial both now and in the long term. Our study revealed that more than a third of business owners are now using social media, messaging apps, and online payment systems more regularly, while one in four are making greater use of online delivery services.
However, while business owners are showing resilience and innovation in abundance, they’re still reliant on macro-economic policy.
The government has a clear duty to protect public health throughout the pandemic, but it’s obvious that any decisions ‘ whether that’s on fiscal policy, further lockdowns, or future packages of financial support ‘ will also have a huge impact on the rate of recovery for small businesses, and ultimately, the UK economy.