Small businesses are facing massive losses thanks to COVID-19

Photo by Adeolu Eletu on Unsplash
According to the figures highlighted by Small Business.co.uk, losses from the coronavirus could equal £69 billion, a figure that could signal an end for many small businesses.
£69 billion equates to an average of £11,799 per business, and for those businesses in a precarious position already, this could force them into closure. 67% of businesses have already stopped trading, according to figures reported, and this is a worrying trend that might continue, especially if there is a second lockdown.
According to Small Business.co.uk, 48% of business owners believe it will take at least a year before lost money is recouped, and 12% believe it will take at least 2-3 years.
It’s a worrying picture although the government has pledged more financial support. This includes an increased contribution to wage costs under the Job Support Scheme and an increase in business grants for those working within high-alert level areas. Will this help be enough to turn the tide for small businesses? Only time will tell, but in the meantime, small business owners also need to be proactive when it comes to financial matters.
What can small business owners do?
Now is not the time for inaction, especially when losses are being made. To counter any problems, small business owners should:
Invoice their clients as soon as work has been completed. Any payment delays could result in more losses, so as soon as money comes in from clients, the better. Of course, this isn’t always possible, as late payers can be expected during the pandemic. They might cite the coronavirus as the reason why they can’t make a payment, which could be a valid or an invalid excuse. Business owners need to consider their next step, be that letting the debt go (and suffering a loss), or calling on debt buyers to help them recoup back some of the money owed.
Cut costs where they can. Businesses do need to spend money to make money but during this time, cost-cutting measures need to be put in place. This might mean switching to a cheaper utility and insurance provider, for example, and they might need to switch to a cheaper supplier too. Unnecessary subscriptions should also be cancelled, and it might be that now is the time to loan rather than buy new equipment. There are other cost-cutting ideas here, each of which should be considered by the business owner moving forward.
Look for legal ways to reduce their tax bill. Tax season is never a happy time for business owners, although the government has promised to defer payments for some. Still, now is the time to find ways to reduce tax liability, by making use of any tax relief schemes and listing deductible expenses. Using the services of an accountant should also be considered for those businesses not already doing so, as further advice will be given.
Finally
With the pandemic still affecting businesses up and down the country, there is no telling how bad things will become in the future. Hopefully, things will improve rather than worsen, but in the meantime, business owners need to act quickly to ensure they don’t make any further losses.