- A quarter (23%) of SMEs believe it is unlikely they will be in business beyond the end of this year as a result of the pandemic, WorkLife’s latest Small Business Monitor reveals
- Three-fifths (61%) say they won’t be able to stay afloat without additional funding
- 45% expect income to remain subdued over the next 12 months
- While 72% of SMEs expect income to return to pre-pandemic levels within a year, 22% predict it will take longer
A quarter (23%) of small businesses think it is unlikely they will be in business beyond the end of the year as a result of the pandemic, reveals the latest Small Business Monitor from employee benefits platform WorkLife by OpenMoney.
The analysis, undertaken just after the Government announced its roadmap out of lockdown in March, looks to uncover how SMEs are feeling about business conditions and what this might mean for their employees.
WorkLife’s study reveals that since tightened restrictions came into force in November 2020, a significant majority (85%) of those surveyed had to make operational changes to adhere to tightening coronavirus restrictions, including reducing the number of employees in the workplace or furloughing staff. Worryingly, one in 10 (10%) were forced to shut down completely and are still unsure when they’ll be able to open their doors again.
Three-fifths (61%) of SMEs surveyed don’t think they can stay afloat without securing additional funding over the next six months. Just over three-quarters (77%) of firms are still dependent on government financial support schemes, with business rates relief (27%) and the job retention – or furlough – scheme (27%) proving most popular. At the time of the survey, 23% of respondents had taken out bounce back loans and 21% were using the business interruption loan scheme.
A fifth (20%) of respondents stated that they were worried about falling sales. Keeping up with bills troubled 17% of SMEs, which may indicate why so many have such a grave short-term outlook.
But it’s not all doom and gloom. Looking ahead, many firms are feeling much more positive about the coming 12 months when compared with this time last year. While 45% of firms expect income to remain subdued, nearly a third (31%) expect this to increase. Those in the retail, arts and hospitality sectors were most hopeful of an uplift, indicating that even businesses in the hardest hit sectors are now more optimistic. On average, 72% SMEs expect income to return to pre-pandemic levels within the year. 22% of those surveyed think it will take longer.
Steve Bee, director of WorkLife by OpenMoney, commented: “While the Government’s roadmap out of lockdown put hope firmly on the horizon, many once thriving small businesses now face an extremely uncertain future. Despite the immense challenges however, UK SMEs have continued to adapt and embody the entrepreneurial spirit our country is famous for. It’s great to see so many feeling confident that their income will start levelling out over the next few months.
“Regardless of a firm’s specific situation, most important now is taking steps to strengthen its long-term health. Given how vital workers will be to recovery, key to this will be ensuring they are equipped to manage the long-term effects of the pandemic, including addressing issues linked to personal finances or mental health.
“This doesn’t just go for existing employees – times have changed so, more and more people joining a business will want upfront information on support they’ll get in return for their hard work and loyalty.
“Looking ahead, workers are going to remember how their employer supported them in adjusting to the new normal. How businesses respond now will have a significant impact on employee wellbeing, productivity and loyalty at a crucial time.”
WorkLife’s Small Business Monitor is based on research carried out by 3Gem among 750 senior financial and HR decision makers in UK SME companies with 5 – 250 employees. Fieldwork took place 14 to 22 March 2021.
Helena Jones (MRM) – firstname.lastname@example.org / 07503 645 612
WorkLife is a digital platform on a mission to make financial advice and employee benefits accessible and affordable to every UK business.
Powered by OpenMoney, it combines top of the range financial advice and market leading benefits with low cost and transparent fees, allowing SMEs to reward their employees with the same great perks as those traditionally enjoyed by workers at larger companies. The platform puts an emphasis on employee wellbeing, making sure they are covered in all the financial, mental and physical aspects of their life.