Critical Challenges Remain as UK SMBs Return to Work

Critical Challenges Remain as UK SMBs Return to Work

Critical Challenges Remain as UK SMBs Return to Work : Sage, the UK’s largest listed technology company, has published its SMBs Tracker highlighting the latest sentiment from the UK’s small and medium sized businesses in the wake of the COVID-19 outbreak.

As the UK enters Phase 2 of its lockdown, the SMB Tracker confirms there is a growing sectoral divide in the impact of the pandemic on the small and medium business community. As SMBs in consumer-facing sectors like retail and hospitality struggle to plan a return to operation, other industries are becoming more optimistic about the overall financial impact.

Average projected 2020 revenue impact has reduced consistently from -30% at the beginning of lockdown to -10%, a +6% improvement in the past week. But businesses in hospitality and retail are the exception, expecting -75% and -32% hits to revenue respectively. Meanwhile, SMB in technology, media and healthcare expect a net positive impact on revenue.

Despite some early signs of recovery, severe financial challenges are projected to continue for SMBs well into Q3 2020. This week the survey finds 61% are currently operating at a loss, and over 50% expect this to continue beyond the end of June; 20% expect it to continue until September or beyond. 39% of businesses have seen their sales halve since the beginning of the pandemic, and most do not expect this to improve by July.

Over a third of SMBs say they cannot yet afford to bring back any furloughed workers. However, 28% have started returning furloughed employees back into the workplace and a further 21% plan to do so in June or July.

Despite the support provided by the furlough scheme, 46% of businesses are considering redundancies over the next 3 months. This is in contrast to 20% of businesses intending to increase their workforce, by an average of 16%.

Key findings from the survey of 500 decision makers in UK SMBs also include: 

  • Technology is a key enabler for business success in this new operating environment – 28% have begun conducting business online in direct response to the pandemic, with 41% using video conferencing or consultation to resume operations, 36% using online retail and 26% using apps
  • 38% of SMBs are still not confident that they can keep their workforce safe over the next 3 months, despite detailed government guidance. The hospitality sector is the least confident (39%), whilst the manufacturing sector is the most confident (74%)
  • 32% of SMBs believe their business will still be making less than 50% of normal sales compared to pre-COVID-19 levels by July
  • 65% of businesses say they are preparing for a second spike in the outbreak, and a similar proportion think this is likely to occur
  • A substantial majority of SMBs remain committed, or have become more committed, to reducing their environmental impact. 67% indicate that they plan to maintain or increase their environmental sustainability efforts after the COVID-19 pandemic

Regional differences are starting to emerge, with the financial outlook among London SMBs markedly worse over the short term. 31% of SMBs in London are planning imminent redundancies, well above the national average of 18%. 71% of London SMBs are currently operating at a loss, compared to an average 59% elsewhere. However, they expect this to be more short-lived than the rest of the country – only 8% believe they will still be making losses in October and beyond, compared to 19% elsewhere.

Manufacturing & Engineering Magazine | The Home of Manufacturing Industry News

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