Home Business Insights & Advice The ravaging effects of COVID-19 pandemic on small businesses

The ravaging effects of COVID-19 pandemic on small businesses

by Sponsored Content
16th Nov 20 3:38 pm

The COVID-19 shocks have taken a toll on British folks’ everyday lives and brought the global economy to a near standstill. As active cases and mortality rates skyrocket, countries have imposed strict travel restrictions and banned large social gatherings to prevent the virus from wreaking further havoc.

While these coronavirus mitigation measures have done their part to flatten the curve, mandatory quarantines have disrupted local UK businesses in various ways. In addition to disrupting the service and transportation sectors, a whopping percentage of UK residents currently remain jobless and struggling to make ends meet with a reduced income.

If the current situation doesn’t improve, long-term economic damage will remain inevitable. The Global Economic Prospects projects a 5.2% decline in the global GDP, the steepest drop in history. Despite the efforts to contain the pandemic’s ravaging effects, experts expect that the deep recession will reduce human capital and interfere with global trade for the foreseeable future.

Much like small and medium-sized enterprises located in other areas of the world, UK businesses should strive to adapt and modify their current systems in accordance with the demands of these unprecedented times. Failure to do so will leave stagnating enterprises in the dust of their more resilient competitors.

Fortunately, many UK businesses have responded to the CDC-approved COVID-19 precautions and are embracing digitized service delivery. A recent report by Studio Graphene indicates that about 46 percent of UK businesses confirm to have entirely switched from offline to online service delivery as of March 2020.

As enterprises continue to discover viable digital innovations and implement them accordingly to survive the financial crisis at hand, business owners struggling to stay afloat should consider virtual offices. These virtual offices can be an excellent solution for those businesses hoping to establish a fully-remote business model.

The impact of COVID-19 on UK small businesses

Small and medium-sized businesses form a large part of the UK economy, accounting for about 50 percent of the country’s total revenue and 44 percent labor force. However, with the COVID-19 disrupting business operations and forcing businesses to rethink their structures, small companies face new challenges.

Unlike large and established companies that can transition easily to remote business structures, small enterprises lack the ability and resources to adapt to the COVID-19 crisis at high speeds.

Because larger enterprises have more manpower and financial resources to execute COVID-10 contingency plans, small businesses may struggle to keep pace with more visible brands.

Reduced revenue

Small businesses, such as retail shops and cafes, rely on the customers who visit their premises for sales. However, experts anticipate that the lockdown and social distancing restrictions will disproportionately affect small businesses’ profit margins and cripple their operations.

A survey conducted by the McKinsey online survey of the UK SMEs indicates that the impact of the COVID-19 pandemic on small businesses across the United Kingdom is enormous. Around 80 percent of the surveyed small businesses reported increased revenue just before the pandemic took an unfortunate toll on the global economy.

On the contrary, today, the same percentage of SMEs report declining revenues. Some small companies have also reported other COVID-19 related effects, including loan defaults, concerns about retaining employees, and their ability to sustain an effective supply chain. Many small enterprises expect to postpone growth projects to avoid business foreclosures.

It’s important to note that the UK has a diverse business landscape. Because of this reality, the pandemic has impacted small businesses differently. The most affected industries being construction, agriculture, and logistics. About 90 percent of the surveyed enterprises in these areas confirm a drastic decline in revenues. Subsequently, the least affected small enterprises in the UK are finance, education, insurance, and STEM sectors.

Disrupted operations

Like other UK businesses, small businesses have been forced to close, resulting in an unprecedented disturbance in operations. Most of these businesses face short-term challenges, including supply chain management, health and safety issues, limited workforce, difficulties meeting consumer demand, along with marketing/sales-related challenges.

While addressing these issues head-on can help lessen the burden debilitating UK small businesses, it might not guarantee a sustainable future, as the coronavirus currently remains an unpredictable force on a global scale. Unfortunately, nobody knows what the future holds. Amidst spiking active cases, some enterprises will transform beyond recognition.

Financial constraints

Small businesses in the UK also face severe financial constraints. Although government-sponsored programs can work to prevent business closures, they can’t cater to all their needs. Because the pandemic isn’t over yet, sustaining a profitable business is hard, increasing the possibility of defaulters.


The effect of the COVID-19 crisis on UK small businesses is undeniable. While every business is expected to shift to remote working structures, if your business can’t afford the transition at the moment, there are other ways to prepare for the second wave of coronavirus.

Allowing looming fears of recession to consume, you won’t do much to insulate your business from imminent doom. Therefore, business owners must remain calm and research their customer’s shifting needs to stay competitive. To prevent your competitors from dominating your business, you must do your part to eliminate negative press that could inflict damage on your brand image.


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