Schools may be going back and the UK may be bracing itself for the easing of Covid restrictions by 21 June, but the long tail of Covid is still causing the majority of business owners concern. New research from Hitachi Capital Business Finance reveals that 44% of UK small businesses are still concerned about the immediate impact COVID – including restrictions on business, social distancing and working from home – whilst one in two (50%) are worried about the long-term impact the legacy of the pandemic could have on their business.
Whilst 62% of small business owners said they were looking for ways to grow their business in the future, 80% said they had serious, pressing concerns that were keeping them awake at night – up from 74% this time last year.
The prominence of Covid-based concerns underlines that, for many small business owners, the impact of a year of lockdowns may take some time to recover from. For example, whilst the proportion of businesses predicting growth each quarter has stabilised at around 27% since the first lockdown, confidence levels remain some way below the quarter-on-quarter average of 36% from the pre-covid era.
Beyond Covid, and with the furlough scheme coming to a close, more small business owners expressed concern over economic volatility (up from 33% to 40% since 2020) and linked to fears of uncertainty, 32% of respondents worried about their ability to retain business and manage their cash flow (25%).
Sector pressure points
The four industry sectors that were most likely to harbour concerns about the long-term economic impact of Covid were hospitality and leisure (65%), construction (51%), manufacturing (53%) and retail (50%) – four sectors that had been especially hard hit during the lockdowns and face a period of rebuilding when restrictions finally end. Small businesses in the media and marketing sector worried most about retaining business (44%) and how they would plug a skills shortage by attracting the right talent (17%).
Around the regions, small businesses in Wales (34%), Scotland (31%) and London (33%) worried the most about the impact of Brexit. Enterprises in the commuter-dependent South East (56%) and London (54%) were most concerned about the long-term economic impact of Covid.
Home workers feel isolated
Whilst there has been much attention on the work-life balance and wellbeing benefits of working from home, the research found that home-based small businesses had a lot more worries that kept them awake at night. Compared to office-based businesses, home workers were more likely to worry about retaining business (38% Vs 20%), Brexit impact (31% Vs 21%) and the long-term economic legacy of Covid on their business prospects (54% Vs. 34%).
Seasonal businesses feel vulnerable
With Covid restrictions due to end for British summer time, the Hitachi Capital data suggests small businesses that have seasonal highs and lows felt more vulnerable and were more likely to worry about a range of key market issues. They were more likely to be anxious about retaining business (44% Vs, 32% for non-seasonal businesses), the uncertainty of economic volatility (43% Vs, 39%) and the impact of Brexit (38% vs. 24%).
Joanna Morris, Head of Insight at Hitachi Capital Business Finance commented: “We all welcome the prospect of Covid restrictions ending this June. It has been a long and challenging year for the small business community. This time last year, small business confidence crashed from 39% to 14% with the start of the first national lockdown – and while it recovered and stabilised thereafter, adapting and surviving has tested many enterprises.
“Our latest research suggests many small businesses are cautiously optimistic, many have proven their resilience and more than three in five are looking at opportunities to secure growth. But it won’t be an overnight transition – many business owners are worried about the legacy of the Covid era and there are many unknowns that will be part of their business planning and forecasting. At Hitachi Capital Business Finance we are helping established small businesses to adapt, to plan for the future and to accept uncertainty as part of their business and growth planning.”