The second SME Barometer from Barclaycard Payments shows early signs of recovery across SMEs from the coronavirus pandemic. However, in the short-term, there are predictions of a fall in performance.
Short term impact of coronavirus
82% of SMEs questioned said that the Covid-19 lockdown has already had a negative effect on their business. Over the next three months, around three quarters of businesses predict that the virus will continue to have a negative impact on them.
During this quarter, the report highlighted that business sentiment has fallen by 31 points. This is now at a score of 79 points out of 200 – anything below 100 shows that there is a negative sentiment. Businesses have a low expectation for growth in the short term and revenue for quarter two is anticipated to fall by 28%.
Micro businesses hardest hit
The coronavirus pandemic has impacted on businesses in different ways and micro companies have been the hardest hit. These are defined as a business with a turnover of under £2m.
They anticipate that their revenue will fall by 30% in the second quarter compared to the previous one. The sentiment score of micro businesses was down by 34 points from the last quarter – to a score of 75. In comparison, small businesses (turnover between £2m – £10m) have a sentiment score of 88 and medium sized companies (turnover between £10m – £25m) recorded 87 points.
Micro businesses are more likely than other companies to be struggling raising finance – 33% reported this compared to only 18% of medium businesses and 19% of small companies.
However, it is medium sized firms who are more likely to have laid off staff or reduced hours during the pandemic. 64% of medium businesses reported they had done this, compared to the national average of 47%. This sector also saw the highest number reporting a fall in staff productivity – 41% against the national average of just 26%.
For small businesses, they are the most likely to indicate a disruption to the supply chain (47% compared to the national average of 37%).
Businesses positive for the future
Despite the short term impact of the coronavirus on businesses, many of them are positive for the longer term prospects.
Just 19% of SMEs believe that the virus will still be having a significant impact on performance in 12 months times. This number falls to only 8% after two years and 70% of businesses believe it will only have a slight or no noticeable impact by this point.
Data from Barclaycard Payments indicates that there are even early signs of growth returning to the sector. Since the start of April, when figures hit their lowest point, the number of SMEs taking payments, both offline and online, grew by 24%.
There are a large number of SMEs who are even looking to invest in the company over the next 12 months. 64% of those questioned are in this position, with the main areas of focus being marketing (26%) and new equipment and technology (20%).
Konrad Kelling, Head of Small Business Acquiring, Barclaycard Payments, said “It’s encouraging to see small and medium-sized businesses starting to come online again after the start of lockdown, and while we don’t expect an overnight recovery, the resilience and perseverance of small businesses gives us hope as we look towards a more optimistic view in the next 12 to 24 months.”
“However, it’s not surprising to see that small businesses are feeling challenged by their prospects for this quarter. With disrupted supply chains, difficulty reaching customers and entirely new ways of working, we understand SMEs are worried – and we are here to provide as much support as possible to help them get through these tough times.”
Maintain business cashflow
One of the most important factors for SMEs during this time is to ensure that they maintain a healthy cashflow. As businesses see a squeeze on customer spending, financial liquidity will be key to survival.
Understanding where your business is in terms of its finances, including how much debt you have and how much your customers owe, will allow you to put plans in place for the future.
Where you have unpaid invoices from clients, the debt recovery team at CEA Limited can help to collect these for you. We work with customers across the country to minimise their losses and recover funds owed to them.
For more information on how we can help your business contact us today on 0113 532 8350 or email office@cealimited.co.uk.
More information:
Covid-19 Impact on UK Businesses
10 ways to help your business financially during the coronavirus pandemic
Unpaid invoices increase by 23% since lockdown
Check eligibility for government coronavirus financial support for businesses