A significant proportion of small businesses wouldn’t be able to survive a second spike of COVID-19, according to new research.
Sage’s latest report, ‘Survival, Resilience and Growth: placing small businesses at the heart of the UK’s economic recovery’, says that 86 per cent of respondents believe a second wave would have a negative impact on their business. Meanwhile, 39 per cent say that it would be severe and a further 15 per cent say their businesses could not survive it.
What’s more, one in two SMEs say they’re not confident they oculd handle a 20 per cent drop in revenue between now and September. A significant number (39 per cent) of businesses aren’t even sure that they’ll return to profitability by December 2020.
These businesses say they would struggle with other issues like a decrease in customers, losing key talent, cyber security and disruption in their supply chain.
Problems will also arise in the early months of 2021 as businesses will need to make payments that have been delayed due to the pandemic.
Dealing with a second spike or coronavirus and other challenges
Small firms are relying on preparation, liquidity and digitisation to protect them against future crises.
Some 40 per cent are building stronger relationships with customers, 36 per cent are becoming more cost-effective in their operations and 31 per cent are adopting new technology or digital capabilities.
At a roundtable discussing the report, Huw Van Steenis, a former advisor to Mark Carney, said that two to three years’ worth of adoption had been done in the last two months. That includes a four-to six-fold increase in online payments.
Nadhim Zahawi, a minister for the Department for Business for Energy and Industrial Strategy (BEIS), commented on the £5bn being put towards infrastructure which will help homes receive high-speed broadband connections and do business more effectively.
Meanwhile, 41 per cent of small businesses are actively looking to increase the productivity of their workforce, 39 per cent are launching new sales, ads and marketing campaigns and 38 per cent want to improve their supply chain.
Many businesses are keen to expand their exporting options too. The media and telecoms sectors are the biggest adopters at 73 per cent, followed by agriculture, mining and quarrying (58 per cent), technology (57 per cent) and financial and insurance services (54 per cent).
Sage’s managing director, Sabby Gill, said:
“The extreme impact of the COVID-19 pandemic has accelerated businesses’ plans for radical changes, which in the long run can improve productivity – whether it’s diversifying the supply chain, engaging with customers in new ways, exporting more or investing in tech”
He also said that there was ‘some optimism’ coming out of the report, with 80 per cent of small business owners feeling as though they are coping well with the current challenges.