When the UK and devolved Governments ordered the country into lockdown on 23 March, many small and medium-sized enterprises (SMEs) lost their entire business income overnight as they were forced to close. Six months later, UK SMEs are still fighting against economic uncertainty and the financial hardship caused by Covid-19. UK SMEs have clearly demonstrated their resilience during the pandemic and this Small But Mighty spirit will be vital in helping them through what continues to be an immensely challenging business environment.
Understanding the financial impact of Covid-19 – the average UK SME lost 30% of their monthly business income
At the start of the crisis, Aldermore was keen to understand the financial impact Covid-19 was having on UK SMEs and how we could best offer support. Our research found that the average UK SME has lost 30% of their monthly business income as a result of the pandemic, a small improvement from 34% in April1.
SMEs across the UK were impacted differently depending on their region and sector. The average SME in Wales for example, lost 54% of their income compared to a loss of 26% for small businesses in the East Midlands. Across the UK, SMEs in the hospitality and leisure sectors were the worst affected, losing on average over half (54%) of their monthly business income.
Many businesses managed to swiftly adapt to the new trading conditions which lockdown brought. Two in five SMEs (38%) adjusted their business plans with this figure rising to 51% for businesses in the East of England. One of Aldermore’s invoice finance clients, Fluid Science, a water solutions specialist, managed to diversify its business and use their expertise to produce hand sanitiser for local councils, the NHS and the Ministry of Defence. Before the pandemic, Fluid Science primarily supplied purified, deionised and demineralised water to dental surgeries, pharmaceutical manufacturers and test laboratories.
‘Small But Mighty’ spirit
Looking ahead, significant challenges ranging from a potential fall in business revenue (38%), another period of lockdown (32%) and an on-going period of economic downturn (30%) still face many SMEs fighting to survive. Meanwhile, the proportion of businesses who said they could survive the current situation indefinitely rose to one in four from 19% in April.
The UK’s small business owners and leaders are proving themselves to have a combination of many qualities: enterprising, innovative, determined, pragmatic and realistic. In fact, the most common words that SME owners use about themselves as they face the future are ‘anxious/stressed’ and ‘determined’ (both 30%), which sums up neatly both the pressures they face and the fighting spirit they possess to overcome them. Encouragingly, ‘optimistic’ outstrips ‘pessimistic’ by 28% to 19%.
Aldermore has launched its Small But Mighty business campaign to highlight the resilience and adaptability of UK small businesses impacted by the Covid-19 pandemic. Click here to find out more information.