Half of small businesses no longer optimistic for future
- Almost half (45%) of small business owners are no longer optimistic about the future.
- One quarter (27%) of UK SMEs don’t think the Government’s support schemes are enough to help them survive the impact of COVID19.
- 50% say further investment is crucial to saving jobs.
- 35% of small businesses in retail, leisure & hospitality sectors think it will be a whole year before they fully recover from the devastating impact of Covid-19.
LONDON, 11th MAY 2020 – The harsh reality of the brutal economic damage of the UK lockdown is starting to bite and hit most small businesses owners hard. Nearly one in two no longer feel optimistic about the future of their companies and may need to shed jobs in 2020.
Almost one quarter don’t think the government support schemes are enough to help them ultimately survive and 35% of small businesses in retail, leisure & hospitality sectors think it will be a whole year before they fully recover from the devastating impact of Covid-19, a new study finds.
Buckworths, the UK’s only law firm working exclusively with start-ups and high growth businesses, surveyed over 500 UK SME owners and decision-makers to gauge attitudes towards the Government’s response to the coronavirus crisis and the economic impact of the ongoing lockdown.
Those who work in the travel or transport industries will be the hardest hit with nearly half (47%) thinking it will take twelve months to return to pre-pandemic operations.
The travel and tourism industries are most pessimistic about the loss of income and their ability to rebound in the next twelve months; 45% of SMEs in Wales, 34% in Scotland and 62% in Northern Ireland all predicting a grim year ahead. however there’s clearly a regional disparity with over half of travel SMEs in South-West England believing they will fully recover from the economic impact of the virus.
The Coronavirus job retention scheme launched by the Treasury has seen the government pay 80 per cent of wages, up to £2,500 a month, to furloughed workers between April and June this year. It has encouraged employers to retain staff by putting them on furlough instead of making them redundant.
The Office of Budget Responsibility (OBR) estimates it will cost more than £40bn over its original three-month time period.
Of the 500 small business owners surveyed, 50% say further investment is crucial to saving jobs. Overall, only 28% of companies think they will be able to bring back all their staff once the furlough scheme has ended and that number decreases in London (23%), the Midlands (22%) and the North-East (22%).
Michael Buckworth, Managing Director at Buckworths, says:
“It is looks likely that the UK Government will start to relax lockdown measures early next week, and with the UK facing the deepest recession on record, the findings from our study demonstrate why getting back to some form of normality is absolutely critical to SMEs up and down the country.
“Johnson’s Government is now on the backfoot, and further delay in outlining a viable lockdown exit strategy or timeline would be absolutely crippling to the economy. Our research shows that Government support measures aren’t enough to sustain companies – they urgently need a boost to their cash flow, and restarting the economy under the “new normal” needs to be the first order of the day.
“While the furlough scheme has enabled businesses to retain employees, once it ends many of those employees will be laid off unless businesses are open for trade and have sufficient working capital. The British Bank Bank loan schemes have provided vital cash injections during the period of strict lockdown, but they are only short-term solutions. The Future Fund will help a small number of highly innovative startups but will be inaccessible to most SMEs. An alternative approach which shifts the onus from the government to private investors should be pursued, particularly as we start to reopen the doors to the British economy. I am advocating for a new temporary tax relief scheme that is similar to the existing Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS).
“Both of these measures offer individual “angel” investors substantial tax relief of up to 50% of their investments, but are subject to various restrictions (including with regards to age, business sector and growth of the business) which limit their availability for many SMEs desperately in need of support. Creating a temporary tax relief scheme with fewer restrictions may encourage investors to support struggling SMEs and save the government from taking on yet more debt it can ill afford.”
The research carried out by Buckworths forms part of the firm’s nationwide campaign: Rebooting British Businesses post COVID 19. The results of the survey will be analysed and dissected in Buckworths’ upcoming whitepaper. You can register to receive the whitepaper via the following link.
Buckworths is the only UK law firm working exclusively with start-ups and high growth businesses. Founded in 2011, the firm has offices in London and Manchester and advises start-ups in a range of sectors with a particular emphasis on tech, fin-tech, and restaurant businesses.