Critical Warning for SMEs
Latest statistics on small businesses from the Office for National Statistics are deeply sobering. What do they mean for you?
The latest statistics from ONS are now out and are well worth your time to read and understand.
In some sectors, only those who take immediate and vigorous steps to plan cash flow and trading for the next two years are likely to survive.
Some sectors are still growing fast, but are facing severe supply chain, talent, or access to growth capital despite that growth.
Some sectors are in shut down.
And all of this is before Brexit hits
Main points from ONS
The percentage of businesses currently trading has fallen to the levels seen in Wave 11 of the Business Impact of Coronavirus (COVID-19) Survey (BICS) (27 July to 9 August 2020), at 82%.
Half of businesses experienced a decrease in turnover, a sharp increase in Wave 17 compared with Wave 16.
The accommodation and food service activities industry had the highest percentage of businesses with no or low confidence that their businesses would survive the next three months, at 34%.
The arts, entertainment and recreation industry had the highest proportion of its workforce on partial or full furlough leave, at 34%, compared with 9% across all industries.
Of businesses currently trading, 10% identified their business as operating in the hospitality sector, and of these, 37% had changed their operating hours as the result of full closure, and 32% because of the 10pm curfew.
Across all industries, 7% of businesses expect to temporarily or permanently close a business site in the next two weeks, with 25% of businesses in the accommodation and food service activities industry expecting to close a business site.
I cannot remember any warnings from the ONS that are this stark, and have never seen a “two week warning” of failure.
Those statistics conceal a split between smaller and larger companies - smaller companies are being hit harder
With half of all businesses showing a drop in turnover, and almost half showing a drop in profits despite government support, since March 2020, the impact is now flowing through to the cash available to pay rents and discretionary budgets. The clock is ticking very loudly.
The depletion of cash reserves is extremely serious, as can be seen here:
What can you do?
Speak to your advisors, and work quickly (two weeks!) to create a plan that will enable you to survive, refocus, and thrive. Or close gracefully. Your choice.