Research by Sage and QuickBooks has shed a gloomy light on the prospects of SMEs in the UK. Both software vendors continue to carry out polls across the UK to determine the state of businesses as some are able to emerge from lockdown.
The QuickBooks Small Business Sentiment Tracker was based on two polls of about 500 SMB decision-makers in April and May. The Sage SMB Tracker completed its third monthly poll of 500 SMB decision-makers in late May.
Confidence is growing but not everywhere
According to QuickBooks confidence is growing. 57% feel confident about business confidence after the lockdown eases from June 15th, up from 46% last months. This still leaves 43% not confident though!
When asked “How well placed would you describe your business in terms of its ability to continue operating over the next month?” confidence seemed lower. Hospitality and Retail, which Sage also called out as in the doldrums, showed a small increase in sentiment to 30%.
Surprisingly, Manufacturing was also a low 33%. One might assume this indicates that solving social distancing on the factory floor is not easy. However the Sage research (qv) showed that this is probably not the case. More businesses are closing as well, if temporarily. More than half (51%) of hospitality have stopped operations, an increase from 37% in May.
Chris Evans, Vice President and UK Country Manager at Intuit QuickBooks commented: “Small businesses have been disproportionately impacted by COVID-19, with many having to close or cut back on activity. The likes of cash flow, late payments, confidence and the burden of admin have all taken their toll, but we are now finally starting to see some light at the end of the tunnel. Many SMEs will be starting to turn their attention to recovery and readiness to reopen their doors.”
How much will this hurt?
Sage looked closer at the financial impact with hospitality expecting a 75% hit to annual revenues as the shutdown continues during for many organisations, their busiest months. Retail has likewise lost 32% of its revenues. There is a silver lining for some industries with technology, media and healthcare businesses estimating a net increase.
Most companies do not see a significant increase in revenues until after July. 61% of organisations are now operating at a loss. For those where the summer months provide their biggest profits, will they recover? Nearly a third (32%) of business will make less than half of their normal revenue by July.
Is the government doing enough
With many small businesses suffering, they continue to look to the government for support. Is it doing enough? This is not just about financial support, although more businesses are taking advantage of various schemes. Some (19%) want an extension to the Self-Employment Income Support Scheme.
These questions about returning to work safely were also highlighted by Sage. Only 39% of hospitality businesses felt they could keep workers safe. At the other end of the scale, 74% of manufacturers believe they can.
