SMEs are an inextricable part of the foundations that support the UK’s economy, and when those foundations are strained through crisis, the negative effects are seemingly limitless in scope and magnitude. The COVID-19 pandemic has proven to be one such crisis. It’s a familiar threat that perpetually starves trade businesses and restricts their financial power, often in extremely difficult ways to recover from.
Experts predict that 168,000 SMEs will close as a result of the pandemic, a worrying figure that’s sure to keep many of even the most resolute business owners awake at night.
The challenges faced by SMEs have evolved far beyond those caused by the initial impact of the virus, and for those of you wishing to steer a company through the rough waters and flourish in what is undoubtedly a testing era, these challenges must be addressed.
By fully understanding the shape of the present landscape and how SMEs have had to adapt over time, you can begin to secure a brighter future for your own business ventures, so here are some of the effects Covid 19 had on SMEs.
Reduced Business Activity
The pandemic has at least somewhat afflicted most, if not all aspects of the modern SME, and one of the main reasons for this is reduced business activity. Health concerns felt by countless members of the public continue to impede in-person shopping, making it difficult for local businesses to retain their competitive edge in the face of mighty competition from larger online retailers.
While the government has introduced some forms of financial support for smaller businesses, various restrictions and social-distancing measures still limit the amount of activity that can take place, resulting in many SMEs urgently calling for more intervention. Plus, many companies had to pause operations entirely for a long period, which is something that many are still trying to recover from.
Halt To The Supply Chain
If the supply chain breaks down, the potential for financial stress can multiply, particularly if business owners feel as though the situation is out of their hands. For example, this might be due to a lack of access to vital inventory or transport services.
The supply chain freezes experienced by many SMEs over the last few years didn’t just happen on a local scale either, and it’s still a worldwide issue that greatly hinders businesses’ ability to import and export goods in general.
This has been (and will likely continue to be) a result of a diminished workforce brought about by the effects of COVID-19 and the increased costs of shipping.
Adopting a flexible data-driven approach to this pitfall can be a great way to prepare yourself for the tumultuous road ahead.
Many SMEs have been forced into temporary closure due to the coronavirus, be it through restrictions or in an effort to save money on wages and overheads.
Unfortunately, temporary closures can often become permanent ones. Businesses without a large monetary reserve or a well-established financial infrastructure are therefore stuck facing an immensely difficult decision: finding the balance between functionality, profitability, and practicality in an unpredictable climate.
SMEs account for three-fifths of the UK’s employment, a hugely substantial statistic that stands to be greatly affected by the pandemic.
Over 800,000 workers have lost their jobs due to the effects of COVID-19. SMEs struggling to keep afloat have often had to work with reduced workforces, leading to them repositioning their efforts or changing the nature of their services in order to do what’s best for their financial situation.
A vast multitude of businesses have turned to the digital world to stay afloat, and while the benefits of doing so can be rife, making a sustainable and effective transition can be financially strenuous.
However, it might start to look like a necessity, especially since many modern consumers prefer shopping online now.
Amount Of Loan Repayments Due To Covid
Even the minimum COVID-19 loan repayments can be damaging for an SME that needed the support in the first place.
In order to deal with these loans and get yourself back to the point where you can pilot your enterprise through a positive growth period, it may be worth seeking out alternative lenders.
Sometimes, the best place to turn in these situations is towards an expert. TSF finance can aid you in securing the financial longevity of your company, so don’t hesitate to reach out if you have any questions at all.