COVID-19 has shaken the global economy to its core. Around the world, businesses have been forced to contend with enforced lockdowns, massive currency fluctuations, and seemingly never-ending uncertainty.
With the UK being one of the hardest-hit nations, British SMBs have felt the full brunt of this COVID-19-related economic fallout. Let’s explore how they’ve coped throughout this period.
By the way, if you are focusing on keeping your business alive at this point, let us help you with bookkeeping advice especially for SMBs in the UK.
Loss in Potential Revenue
According to estimates from Simply Business, the wide-ranging effects of COVID-19 could end up costing British SMBs up to £69 billion in total. Given that there are reportedly around 5.97 million SMBs here in the UK, that comes out to an average of £11,557.79 per SMB.
This is supported by research conducted by McKinsey back in June 2020, stating that 80% of British SMBs had their revenue negatively impacted as a result of the pandemic.
In September 2020, Simply Business declared that 234,000 British SMBs had already stopped trading for good due to COVID-19.
What’s more, according to research published in October 2020 from King’s Business School, 61% of SMBs believe their business’s very existence is under threat.
This is supported by recent research published by the Federation of Small Businesses (FSB). In January 2021, they stated that at least 250,000 small businesses might go under if the government didn’t provide further financial aid.
However, it’s unclear whether this figure can be attributed to COVI-19 alone—after all, Brexit-related disruption is also having a significant toll on British SMBs’ financial health.
International Trade Disruption
The Fintech Times reports that 1.5 million UK SMBs have had to put their regular international trade on hold. Given that SMBs’ international trade brings in a staggering £200billion annually, this will have a profound knock-on effect on the UK’s wider economy.
Layoffs and Furloughs
Surprisingly, research from King’s Business School suggests that a mere 19% of SMBs have been forced to lay off members of staff—though 45% have taken advantage of the government’s furlough scheme. That being said, it’s worth noting that this figure excludes younger companies that were unable to provide a two-year-plus revenue track record.
The FSB reports that as of January 2021, 23% of SMBs reduced their headcount in the third quarter of 2020—and 14% are planning on making further cuts over the next three months.
Walking Forward With You
If you own (or work in) a small business, you’ve likely felt the impact of the economic fallout from COVID-19. You might’ve been forced to lay off staff. Perhaps your international trade dried up, despite the fact that your bills kept on coming in. Maybe you’ve even considered closing your doors for good.
None of us can change the economy single-handedly. If we want to not only survive this period but thrive once it’s all over, then we need to come together and provide each other with the help we need.
That’s where we come in. Osome’s dedicated team of accounting experts works tirelessly to ensure that British SMBs manage their money as effectively as possible while remaining compliant at all times.
If you’re looking for a helping hand, don’t worry—we’re here for you. Get in touch to find out more.