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There is no doubt that the impact of Covid19 on Small Businesses have been devastating in UK and Coronavirus pandemic has affected all businesses around the world.
Global leaders are navigating a wide range of interrelated issues that span from customer safety, employee retention, liquidity, keeping up with operations, and navigating complex government support programs.
To help you understand the effects of COVID-19 on small businesses, we have summarised the latest thinking and insights from professionals globally.
Let’s have a look.
Businesses closing down
Small businesses create 1.5 Million jobs annually, accounting for 64% of new jobs created in the UK.
The statistics show that small businesses have always been an integral part of the UK economy and growth. Apart from job opportunities, they offer financial growth and an array of unique products and services.
But now…
Close to 80% of businesses have closed down temporarily due to the coronavirus crisis. Two-thirds of respondents indicated a possible permanent closure should the crisis persist in the next five months.
It means nearly 7.5 million small businesses will close permanently and 3.5 million at risk of closure in the next two months.
Dropped revenues
The coronavirus has had devastating effects on small business revenue.
Nearly 99% of businesses in the UK are small businesses, and they employ about half the UK workforce population.
Small businesses lack cash reserves to sustain a month-long interruption. It means that over 2M workers are likely to lose their jobs in a single week due to the pandemic.
There’s also the possibility of “startup depression” where new businesses will find it difficult to enter the market because of the pandemic.
Dramatic reductions in revenue drive mean there’s a risk of unemployment of layoffs.
Economic volatility in the FX market
Look at the stock market.
You’ll realise that coronavirus has caused a volatile economy, but there are other various factors at play.
The latest Global Financial Stability Report reveals that the financial system is feeling the dramatic impact, and any further intensification of the crisis could affect financial stability.
Since the coronavirus outbreak, prices of risky assets dropped sharply – experiencing more than half of the declines experienced in 2008 and 2009.
For example, equity markets have endured declines of 30% or more at the trough. Credit spreads jumped, especially for lower-rated companies. Major short-term funding markets have also shown signs of stress, including global markets for the UK.
With a spike in volatility, market liquidity has deteriorated significantly even in markets always seen as deep such as the UK markets, contributing to sudden asset price moves.
Hope for the new generation amid COVID-19 crisis
The new generation of entrepreneurs is likely to create side businesses. Gen Zers and Millennials are 188% more likely to create side businesses than Baby Boomers or traditionalists. It’s now easy to start a new business – especially for the new generation with passionate ideas, they want to bring to the market and become their own bosses.
The rise of online marketplaces, low code or no-code, and outsourced development has made it easier to run a business from your home’s comfort.
Conclusion
There’s no doubt that 2020 is a significant year for small businesses. With increasing competition, the above points will help guide your way to making better decisions if you are a small business owner or interested in starting one.
And even if you face challenges, knowing the current statistics will help you tackle them more proactively.
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Cubed Consultancy ltd