"The situation is continuously changing, and many SME business owners are having to swiftly adapt by finding ways to diversify their products and services"
The average small business has lost 34% of its income as a result of Covid-19 and 25% have seen a decrease of more than 70%, according to research from Aldermore.
The hardest hit businesses have been those in the hospitality and leisure industry with an average loss of 53% of their income, followed closely by the food and drink industry with an average loss of 49%.
Most SMEs estimated their business would see long-term damage, or even closure, if conditions did not return to normal within the next five months; one in ten (11%) have already seen impacts which they believe will last for the long term and 3% were planning to close.
Despite this, many business owners are fighting back against the impact of the outbreak on their bottom lines by reacting quickly and adjusting their business plans.
The majority of SMEs (72%) have taken steps to reduce costs as part of their Covid-19 response plan with strategies including decreasing operating costs and discretionary spending (31%), furloughing staff (29%) and drawing on capital (17%). One in 10 SMEs have also reported applying for a Coronavirus Business Interruption Loan (11%).
In addition to cutting costs, 67% of SMEs have also looked at ways to increase income. Some of the most pivotal ways that small businesses have done this include shifting more business online (17%) and investing in new technology to operate remotely (15%).
39% of SMEs have adjusted their business plans to reflect the ‘new normal’ due to Covid-19 and 7% have pivoted to an entirely new market in an effort to drive business.
Despite widespread concerns, a small but significant number of SMEs (8%) anticipated they may even see an increase in business revenue as a result of the Covid-19.
Tim Boag, group managing director at Aldermore, said: “Businesses are having to survive in an environment which has never been more challenging or uncertain. The situation is continuously changing, and many SME business owners are having to swiftly adapt by finding ways to diversify their products and services, as well as cutting costs, managing supply chain arrangements, and furloughing staff in order to survive.
“As a bank born out of the last financial crisis, we know the road ahead will be a difficult one, but that it can be overcome with the right help and support. Aldermore continues to work with business customers to respond to their needs and provide funding solutions wherever we can; including the Coronavirus Business Interruption Loan Scheme for asset finance and soon invoice finance. We continue to engage with and influence a range of industry stakeholders in order to help businesses survive during this time of great uncertainty.”