More firms are standing strong in Covid world

The average small business reckons it could survive for just four months if the UK was to enter another period of lockdown.

That’s the bleak side of the continuing economic downturn, according to research from Aldermore Bank.

But the good news is that 26% of small firms could survive the current situation indefinitely, a 36% increase on April.

Some 2.2 million small to mediumsized enterprises have adjusted their plans in light of the pandemic as they anticipate future issues such as a fall in revenue, another period of lockdown and an ongoing downturn.

The crisis has caused a 30% loss in monthly business income, slightly better than the 34% in April for the average SME. But 18% of smaller firms have seen a decrease of more than 70% of their business income.

Smaller enterprises have demonstrated resilience to the Covid-19 pandemic in different ways with 69% taking steps to increase income. One in five, 20%, have increased the amount they communicate with customers and clients, while 19% have moved more of their business online and 10% have diversified into a new market.

In addition to increasing income, 67% have continued to cut costs to help cover their losses, making an average saving of 25% on business expenditure with strategies such as reducing operating costs and discretionary spending. Tim Boag, group managing director of business finance at Aldemore, said: “Whilst the economy has started to open up, the Covd-19 pandemic continues to have a profound impact on the SME community.

“The current situation is uncertain, and the threats of further localised lockdowns are a concern to businesses who are trying to recover from the economic shock of the pandemic.

“However, it’s encouraging to see that SMEs are being resilient in the face of the adversity and we praise their efforts to adapt their business models, find different and innovative ways to increase income, as well as diversifying into new markets.”