6 million UK small businesses described as precarious
The Covid-19 pandemic has impacted small businesses in a wide variety of ways, and the extent to which they’ve been affected is only now coming to light. Thanks to a new study carried out by King’s Business School sheds some light on how small business owners are feeling.
Unfortunately, their views of their prospects in the near future are not at all positive, and this is largely down to the impact of lockdowns and Covid-related impacts on the economy and consumer habits. Here’s more about what the research found and what it means for small businesses and employment in the UK.
Covid-19 has placed 6 million UK small businesses in a position of precarity
The research carried out involved speaking to entrepreneurs who own small businesses in the UK. The intention was to find out more about how small businesses are coping with the chaos caused by the pandemic and subsequent lockdowns. We know businesses have found it tough, but the outcomes of this research is stark.
It found that in total an estimated 6 million small businesses in the UK are regarded by their owners as being precarious. That means that many small businesses won’t survive, and many more are experiencing unprecedented levels of uncertainty at the moment.
Two thirds of entrepreneurs fear their businesses won’t survive the pandemic
Close to two thirds of the entrepreneurs who were spoken to through the course of the research reported concerns over whether their business might fail to survive under the strain of Covid-19 and the related restrictions. The pressures and demands are varied and are different across industries.
The same research found that over a half of entrepreneurs interviewed felt that their business was likely to run out of money at some time within the next year. The pessimism felt by entrepreneurs is summed up by the fact that around two thirds of them also expect their fortunes to get worse not better in the months ahead.
Cost Cutting Has Been Made Essential
One of the most important things many small businesses have been doing is cutting their costs and scaling back previously planned expansion efforts. This massive change of direction has caused disruption in untold ways. Some businesses use a virtual office and work remotely, scaling back on office costs altogether.
For most businesses, making savings has been essential. Even with help from the furlough scheme, some businesses have had to cut their team back and let staff members go because of a lack of income meaning they can’t afford to keep the same size team in place going forward.
Up to 16.6 million jobs are at risk
One of the issues that many people are becoming increasingly concerned about is what all of this means for jobs in the UK. With over 6 million small businesses in a precarious position right now, that means that an estimated 16.6 million jobs are potentially at risk of being lost in the coming weeks and months.
Those levels of job losses or even a number even close to that would be disastrous for the country and see unemployment levels that this country hasn’t seen for a long time. That’s why the government’s improvements to the furlough scheme have had to come into place amid pressure from businesses and opposition in parliament.
Small businesses make up 52% of the private sector economy
One of the reasons why small businesses are so important and why their precarity should be something that we all pay attention to is the proportion of economic activity that small businesses are responsible for in the UK in normal times.
Small businesses make up about 52% of the private sector economy in the UK. If a large proportion of those small businesses were lost, economic output would take a drastic hit. Small businesses matter to the wider health of the economy and that’s a fact that can’t be ignored.
Women led businesses are taking a big hit
Businesses that are led by women have been found to be taking among the biggest hit right now, which is something else that’s worrying. 72% of women-owned businesses are currently reporting a reduction in trading volumes due to the effects of the pandemic.
For businesses owned by men, that figure for reductions in trading volumes is felt by only 56% of businesses. This is a problem that requires further investigation as we navigate the impact of Covid-19 on businesses and the UK economy.