A survey of our clients and contacts has revealed that COVID-19 has cost small business owners in the South East more than just financial losses.
Although nearly 80% of businesses surveyed said that financial losses have been the biggest cost, the results show that the Coronavirus pandemic has had other significant impacts, including mental strain, lost customers and morale, and permanent staff redundancies. The survey also highlighted that many business owners were unprepared for the impact, with 65% either having no funds, or insufficient funds, to carry them through this difficult time.
As a result, 6% say they wish they were an employee, not a business owner. But, whilst it’s been and continues to be tough, 48% have said that they can see a future ahead. Many business owners have demonstrated great resilience, digging deep to ensure the survival of their businesses, with some even thriving during this difficult time, painting an optimistic view of the future for businesses in the South East.
We surveyed 104 of our clients and contacts located in Kent (including Dartford, Sidcup and Bexley), as well as further afield across London and the South East, across a broad range of sectors, and here are the findings...
41% of small businesses estimate COVID-19 will reduce their turnover by 10-30%, but some are bucking this trend
We asked small business owners what percentage reduction in company turnover they foresee.
- 9% of business owners surveyed believe their turnover will drop by over four fifths
- A reduction of between 51-80% in turnover is expected by 7% of those surveyed
- Just over a fifth predict losses in turnover of 31-50%
- 41% of respondents revealed that they would lose between 10-30% in turnover
- 5% of those surveyed expect less than a 10% reduction
Business owners were also asked about other impacts:
- 52% have suffered mental strain
- 43% have lost customers
- Loss of morale has been experienced by 30%
- 1% will have to start their business all over again
But, there are some success stories, with nearly 6% of those surveyed saying they have increased their turnover, and some predicting increases of up to 300%.
Adapting to a new ‘normal’
When asked what changes business owners have had to make to secure their company's future, 58% said reducing company expenditure, closely followed by furloughing staff at 57%. Nearly 42% of business owners have had to reduce their own salaries and 38% have taken out loans to keep their businesses going.
Over half have also had to adapt their working practices, with changes including staff working remotely and implementation of new technologies and systems to facilitate this, amending payment terms, reconfiguring the workplace to allow safe social distancing and increasing hygiene measures for those who cannot work from home, and increasing their profile to make their service stand out in the market.
With lockdown in the UK starting to ease after more than two months of restrictions, and the UK Government announcing that non-essential retail can reopen later this month, businesses are increasingly expected to welcome back employees over the coming weeks. But, will businesses return to ‘normal’?
When asked, 44% say their business won’t return to normal when lockdown is lifted, but how confident are business owners feeling about the future?
38% remain confident that they’ll continue to do good business
Whilst the pandemic is causing uncertainty for the UK’s small businesses, there are signs of strength among business owners. And, with SMEs accounting for 99% of Britain’s businesses, their continued success is crucial for the economy.
Despite the disruption caused by COVID-19, two-thirds of business owners are very confident that their company has a positive future, 31% are unsure and, sadly, 3% are very worried that their company does not have a positive future.
Accountants have provided the most valuable support for business owners
During this time of crisis, business owners have been turning to many sources for information and advice on how best to shore up and mitigate risks to their companies. 5% say their bank has been helpful, but the leading source of support has been accountants, with two-thirds of respondents saying that they have provided the most valuable advice.
“The results of this survey show how much COVID-19 has affected our clients and network of contacts, and we know that many were unprepared for the impact of these challenging circumstances. This is something I believe is reflected across the wider business community,” comments Miguel Calabrese, MD at Blue Rocket Accounting. “One respondent lost 98% of their income during the first nine weeks of lockdown, but has since recovered and is now predicting turnover reductions of 30% down yoy. Someone else commented that it wasn’t losses so much, but that growth next year would be what’s impacted.”
Miguel continues: “One thing that has really stood out is the resilience of small business owners, and their ability to adapt when under pressure. One of our local bakeries is now selling make your own pizza kits where they deliver a box with all the ingredients and families can make their own pizzas. They have replicated this approach for brownies, cakes, cookies etc. This is just one example of triumph in difficult circumstances, and a testimony to how great Britain’s small businesses are.”
Advice for small business owners experiencing challenges
We have been supporting our clients in a number of ways, including creating a dedicated COVID-19 news and support area on their website, and manning a closed WhatsApp group where clients can ask questions at pretty much any time, day and night.
The survey highlighted a number of common challenges being faced and here we share some advice on how to combat them:
Challenge faced: Financial losses
Advice: Review and manage your cashflow and processes closely, keep your budgets and forecasts updated
Challenge faced: Reducing own salary/takings
Advice: Think profit first. Not paying yourself breeds inefficiencies in your business. It’s tough, but now is not the time to start bad habits
Challenge faced: Mental strain
Advice:Take a break! Set an alarm for every hour and then get up and walk around, go in the garden to enjoy the sunshine, talk to people
Challenge faced: Lost customers
Advice: Consider ways you could diversify. If you’re a personal trainer, your clients might be interested in virtual training sessions, for example
Challenge faced: Lost morale
Advice: Keep your team together with regular catch ups on Teams or Zoom, run a team quiz or enjoy a drink together on a Friday after work (virtually, of course). If you’re a freelancer, networking and peer group catch ups are good places to share experiences and challenges
Challenge faced: Adapting working practices
Advice: For many, COVID-19 has shaken up working practices for the better, with teams now able to function efficiently remotely. Think about what has worked well for you and your business and what can be retained once lockdown lifts
Challenge faced: Winding up the company
Advice: Be careful of the dividend trap for the loans and rules on liquidation
Additional support and advice can be found in the dedicated COVID-19 news and support area on this website. Alternatively, give the Blue Rocket team a call on 01322 555 442 or email firstname.lastname@example.org.