Here’s The Latest Information From Invoice2Go To Support You During Difficult Economic Times
It has been over six months since COVID-19 arrived in the UK and changed the world as we know it. It has infiltrated the way we live our lives, impacting everything from how we work, socialise, spend time at home, and take care of our health.
While not all the changes have been negative, there’s no denying that we’re living in difficult economic times and small businesses have been among those hit hardest. If you’ve found your work has suffered during this period, it would be reasonable to question the future of your business, as well as wonder what you can do to help your business survive.
We want to ensure that you’re well-supported during these uncertain times. This guide will look at the facts and figures to help you understand your situation as well as laying out your options for relief. We’ll delve into:
- The numbers and statistics related to COVID-19 and the way it has impacted small businesses
- The types of businesses that are struggling most vs the industries that are staying afloat, or even booming
- The resources and relief currently available to small business owners
We’ll also be analysing the last recession to understand what went wrong, and what you can do to help your business going forward. There is valuable information to be gained from the past and reflecting on what worked and what didn’t.
Finally, we’ll leave you with our best tips to keep your business going despite the current challenges you might be facing. Let’s dive in:
How has COVID-19 impacted small businesses in the UK?
To date, the UK has had over 298,000 confirmed coronavirus cases. Beyond the impact on the public’s health and the NHS, COVID-19 is having significant implications on business owners, and the economy as a whole.
More than half of small businesses currently see that economy as weak and are expecting a recession to hit. They have reason to feel this way: 80% of small businesses report declining revenue, compared to the same amount who reported stable or growing revenue before the pandemic began.
These are the common issues small businesses face:
- The need for crisis scenario planning and management
- Cash flow management and concern about defaulting on loans
- Managing their workforce and redeploying employees where they are most needed
- Ability to retain employees
The good news is, there are some early signs of economic recovery. In May alone, the economy grew by 1.8%. This increase may seem like a small amount on its own, but it signifies that economic decline has slowed as businesses resume trading after lockdown.
Who is struggling the most?
COVID-19’s impact has been felt not just in the UK, but worldwide, as drastic but necessary lockdown measures have forced a variety of industries to shut down. Because of this, roughly 7.6 million jobs in the UK (24% of the national workforce) are at risk.
While no sector or region has been left untouched, the impact seen across different sectors is particularly uneven, and they vary in the ways they’ve had to adapt.
Here is a breakdown of some of the industries who have been hit the hardest:
- The education sector has been negatively impacted by the current lack of international enrolments, as well as insecure employment held by staff on precarious contracts – many of whom have already been dismissed.
- The hospitality industry was put under extreme pressure during lockdowns, and economists predict it will be difficult to recover. There were many furloughed workers across the industry from as early as April.
- The construction industry saw a decline in output from April 2020 – the most significant fall since monthly records began in January 2010 – likely due to the suspension of many construction projects.
- Wholesale and retail trade services were most likely affected by social distancing, as well as changing consumer spending habits. They had the highest amount of jobs at risk of all industries.
- Real estate has been impacted in both the commercial and residential sectors. Many tenants struggled to pay their rent due to the economic impacts of COVID-19.
There’s no denying that there has been a radical shift in lifestyle and this undoubtedly means some businesses have benefited from the “new normal”. Among the industries who have been minimally impacted by COVID-19 are the scientific, information technology, and finance sectors.
For example, Zoom or House Party are now household names, although many people had never heard of them before going into lockdown. Retailers of bicycles and exercise gear have seen tremendous boosts in sales, as have home and garden stores, and electrical goods.
Switching to convenient, contactless online sales systems have helped many retailers and small businesses stay afloat amidst the pandemic.
Where can you get help?
There are various types of relief available to support small business owners during this time, as well as endless resources you can use to find help. If you’re feeling overwhelmed and concerned for your business, have a read through the following links so that you know what your options are, and where you can seek help if necessary.
Start with the official resources to find up-to-date information as well as government advice:
- The NHS has provided a range of fact sheets with health advice and support.
- The official Coronavirus Guidance & Support page from the government is an excellent starting point for information on the virus and staying healthy.
- The World Health Organisation contains advice for the public as well as up to date news and figures.
Then move on to business support:
- The British Chambers of Commerce are supplying support on all aspects of running your business during COVID-19.
- Enterprise Nation is supporting entrepreneurs and small businesses.
- FSB (National Federation of the Self Employed & Small Businesses) is providing up to date information and news to help your business re-open.
- This coronavirus advice page from the CIPD (Chartered Institute of Personnel and Development) provides information for your business and workplace.
Some building-specific resources may be helpful, depending on your industry. If these apply to you, you can find them here:
Financial support is also available through the government, with a range of schemes depending on your circumstances. Use the business support finder to determine your eligibility options.
What is a recession?
It appears the UK, and much of the world is heading towards a recession – perhaps the worst in decades. While this may sound scary, remember that we have been through recessions before, and we have always come out the other side.
It can be helpful to look back on past economic hardships and see what can be learnt from our history. There are often patterns that repeat themselves, and you can use these to predict how things might work out and, therefore, what you can do to minimise the impact in your own life.
Firstly, let’s understand what a recession is. A recession is defined as a period of temporary economic decline, during which trade and industrial activity are reduced.
We generally expect a country’s economy to grow as its citizens build wealth due to the increase in the value of the goods and services it produces. These goods and services are referred to as Gross Domestic Product (GDP). When GDP starts to decline, and then continues for two three-month periods in a row, it becomes known as a recession.
Due to the sudden GDP drop due to COVID-19, the current recession could be the worst the world has experienced in the past hundred years. However, many are hopeful there will be a sharp recovery, as the steep decline was, in part, due to many businesses being forced to shut down.
What can we learn from the last recession?
The 2008 recession, also known as the Great Recession, took a lot of people by surprise. It began after the global credit crunch which, in essence, left global banking systems short of funds. It resulted in a prolonged period of low or no growth and a rise in unemployment, leaving many people in a dire financial situation.
Here are the steps that you can take to minimise the impact of the current recession we are experiencing:
- Diversify your skills. The classic case of “don’t put all your eggs in one basket” is more relevant right now than ever. Those that will get through this recession are those who are willing to be adaptable and hone different skills. In a downturn, the needs of a community change, and your business needs to be able to shift to suit those needs – not the old needs that may no longer be relevant.
- Don’t get too comfortable. You may have thought your business was booming and that it can only go up from here. History has shown us that we never really know what is around the corner, so we must always prepare for the worst. However, don’t let this make you a pessimist. Instead, allow yourself to find comfort in the fact that your business is prepared for whatever challenges might come your way.
- Cut down unnecessary spending. Protecting your cash flow is vital right now. Whenever we face an economic crisis, we get a reality check on our finances. Perhaps you can think of previous spending habits and purchases that were over the top because your business was stable financially. Now is the time to rein it in and not make any significant financial decisions until things are a little more stable. Now would also be an excellent time to review your inventory costs and make cuts where possible. Here are some useful tips to help you improve cashflow.
- Stay relevant. Now is not the time to go quiet. Instead, think about what you can be doing at this time to win new customers and retain old ones. Contrary to popular belief, you do not want to be cutting back on marketing at this time. Instead, use it to stand out against the competition and build brand awareness. Monitor your market carefully and make sure that you are staying ahead of the curve. Take a look at our marketing masterclass to learn how to make a more effective plan for your business.
- Be patient. The last recession lasted only two years, and the financial sector had mostly recovered by mid-2009. While sacrifices may be necessary right now, just know that this does not mean the changes are here to stay. One day this will all be a distant memory.
We are living in unprecedented times, and it is entirely reasonable to feel anxious by the uncertainty surrounding your own business and the economy as a whole. But, remember: knowledge is power. Arm yourself by reading and learning about the resources and services available to you, so that you can ensure you are getting all the help that you need.
It is essential to know that you are not alone and that many small business owners and contractors are in the same position as you. We will all get through this together. To connect with other business owners like you and to learn more valuable tips and tricks, considering joining our Facebook group.