Almost one fifth (17%) 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.
Simply Business spoke to over 500 SME owners across the UK and also found that a third (32%) feel they’d be impacted worse than the first lockdown but would survive. A further third (34%) feel a second lockdown would have the same impact as the first and just 5% think they would cope better than the first.
When looking at business recovery, around a quarter (24%) of businesses think it will take 12-18 months to recover the money lost during Covid-19. One in five (19%) think 6-12 months and one in 10 (12%) think 18-24 months. A further tenth (12%) think it could take a staggering 2-3 years.
In terms of customer numbers, the report found that a quarter (24%) of small businesses also believe it will take between 6-12 months for their customer numbers to return to normal. Well over a tenth (14%) think it could be over a year.
Encouragingly, 68% of small business owners expect their employee numbers to remain the same.
However, one in five (21%) expect it to decrease, the majority of which (13%) expect it to decrease significantly, putting a risk to employment levels across SMEs.
The study also showed that 62% of SME owners feel less confident about the long term prospects of their business.
The majority do, however, feel comfortable about resuming trading whilst adhering to government guidelines. Within this, 43% say they are ‘comfortable’ and a further 30% are ‘very comfortable’.
Despite the overall challenges, there are some positives to come out of the first nationwide lockdown. A quarter (25%) of SME owners say their staff have learnt new skills, one in five (21%) have found new customers, and 19% of SMEs have adopted new technologies. Almost one fifth (17%) have even expanded to offer more products or services.
Technology has arguably had the biggest impact on how well a business has been able to survive lockdown, with 42% of SME owners saying they are more reliant on technology now because of coronavirus.
Just under half (47%) are using messaging apps more (such as Facebook Messenger or Whatsapp) for business, a third (33%) have increased their use of social media, 36% have introduced contactless or online payment systems, and a quarter (25%) have started to use online delivery services.
Alan Thomas, UK CEO at Simply Business, comments: “Whilst business owners are innovating, they are 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, this second lockdown, or packages of financial support – is going to have a huge impact on the rate of recovery for small businesses, and ultimately, the UK economy.
“SMEs account for 99% of all UK businesses and contribute a combined £2 trillion annually. Put simply, we need small businesses to bounce back if we’re to recover economically.”