Cost of Covid-19 to small business now exceeds £109 billion
3-minute read
As we mark two years since the first national lockdown, a new report from Simply Business reveals the mounting cost of Covid-19 to small businesses and the self-employed.
We spoke to more than 550 small business owners from across the UK to understand the ongoing effects of the pandemic for this vital section of the economy.
1 in 6 say they’ll never financially recover
Our study reveals 87 per cent of small business owners have lost money over the last two years, averaging £20,981 each in total, with many still suffering financially.
With one in six small business owners believing they'll never financially recover from the pandemic, this represents almost one million UK small businesses in total.
While many remain confident of eventually recovering financially, the outlook still remains bleak:
- one in five don’t expect to ever return to pre-pandemic trading levels
- 43 per cent say recovery will take at least another year
- 1 in 3 fear running out of money
- 23 per cent are concerned about being able to pay back loans from government, private lenders, or friends and family
A unique set of challenges
Despite one in six believing that their business is now better prepared for the future, small businesses are facing a unique set of challenges as we emerge from the pandemic.
When asked what their biggest challenge is now, the majority of businesses said rising costs. This was closely followed by loss of customers.
Biggest challenge | % of businesses |
|---|---|
Rising costs | 70% |
Loss of customers | 63% |
Supply shortages | 35% |
Loss of long-standing contracts | 25% |
Recruitment challenges | 9% |
Labour shortages | 8% |
We’ve previously reported how rising costs and supply shortages are affecting tradespeople, and it’s clear to see this continues to impact the ability for UK businesses to recover post pandemic.
While the government’s lifting of restrictions earlier this year was predicted to give businesses a boost, 31 per cent believe things have actually been harder since the restrictions ended. What’s more, 63 per cent believe that the government hasn't offered enough financial support, consultation, or communication in the period since.
2 in 5 are concerned about further restrictions
As Covid cases rise again in the UK, two in five (38 per cent) small business owners are concerned about another lockdown and tighter restrictions.
Two fifths (40 per cent) say they're ‘not at all confident’ about their preparedness for a further lockdown or tightening of restrictions. What’s more, a worrying 42 per cent predict the temporary or permanent closure of their business should the UK enter another lockdown.
Despite this, 23 per cent say they have strong faith in their ability to weather another lockdown.
More positive times ahead
Despite the challenges, our study revealed 43 per cent of owners are either ‘optimistic ’ or ‘confident’ about the future of their business. Meanwhile one quarter feel the challenges of Covid-19 have improved since restrictions ended earlier this year.
Over the last two years, owners say they’ve also had the time to:
- learn new skills (30 per cent)
- adapt their business’s services or products (22 per cent)
- adopt new technologies (18 per cent)
The pandemic also saw people starting new businesses across the country. Over one third of people in the UK now run their own side hustle – and more than half of these were started during the pandemic.
We’ve also seen a growing trend for outdoor businesses such as craft stalls, market stalls and food truck businesses. Other top businesses ideas include online retailers and photographers.
‘A period of resilience, innovation, and creativity’
Alan Thomas, UK CEO at Simply Business, comments: “Two years on from the UK’s first national lockdown, the continued impact of Covid-19 on small businesses is clearer than ever. With owners losing almost £21,000 each on average, one in six believe they will never recover financially from the pandemic.
“For small businesses, there’s no doubt that it’s been a period of incredible difficulty. But it’s also been a period of resilience, innovation, and creativity, where the unique spirit of the UK’s self-employed community has once again been clear to see.
“Accounting for over 99 per cent of all UK businesses and contributing trillions of pounds in turnover every year, small businesses sit at the heart of our communities and are vital to our economy. As the types of challenges facing small businesses evolve, it’s essential that we all play a role in supporting their revival over the coming months and years.
“From local bakeries and greengrocers to contractors and tradespeople, if the UK is to recover from the effects of the pandemic, we need small businesses to bounce back.”
This report follows our 2021 research into how the pandemic has affected small businesses.
Later this year we’ll be announcing details of our Business Boost grant. Sign up to be the first to know how you can enter.
How is your business managing recovery after the pandemic? Please leave a comment below to tell us about your experience.
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Written by
Catriona Smith
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
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