A survey of the World Bank, OECD and Facebook reveal that despite the Covid-19 crisis, challenging restrictions and revenue loss, British and Irish SMEs are feeling cautiously optimistic about the future of their businesses.
The Future of Business Survey surveyed 30,000 business owners, leaders and managers during Covid-19 (January – May 2020), including 2,793 British SMEs and 1,402 Irish SMEs.
Closures due to lockdown measures
Among the 91 countries surveyed, both Ireland and the UK had one of the largest closure rates, respectively 58% and 43%. In the survey, more than half of the closures are referred to as government lockdown measures. Despite the lockdown, 54% of SMEs globally would start up again within 3 months. SMEs in the UK and Ireland reported one of the highest proportions: respectively 71% and 69% of owners would reopen over that period. For these SMEs the main factor for their ability to reopen would be the removal of containment policies.
Cash flow remains a challenge
Most of the SMEs worldwide recorded a sales reduction of more than 50%. SMEs in the UK suffered a steep decline in sales: 68% compared to the same period last year. Irish SMEs suffered a 52% decline in sales.
With typically smaller cash reserves than larger enterprises, SMEs have turned to their governments for financial assistance. 30% of SMEs in Europe received some form of financial assistance; 59% of Irish SMEs received financial support.
Despite financial aid, the 3 largest near-term challenges for SMEs surveyed are lack of demand, cash flow constraints (37%) and repaying outstanding loans. 54% of Irish businesses expect cash flow to be a challenge in the near future compared to 41% for their British counterparts.
Effects on workforce
The survey also showed that 33% of the SMEs worldwide had to reduce their workforce as a result of the pandemic. In the UK, 14% of the SMEs expect to have the same workers when they reopen; in Ireland 28% of the SMEs expect the same.
Preparing to reopen and adapt to the post-COVID-19 economy
Despite economic challenges, SMEs are also preparing to reopen and adapt their business models to a post-COVID-19 economy. Over 40% of Irish SMEs have adapted by setting up a website or online business presence, one of the highest figures globally.