Response of SMEs to COVID-19 Disruption: Implications for UK

This research study investigates the response of small and medium sized enterprises (SMEs) to the disruption caused by COVID-19 and its implications for the United Kingdom (UK). It aims to determine the positive immediate responses for SMEs to recover from COVID-19, identify the major challenges faced by SMEs in the UK, and analyze the threats and risks posed by the market external environment. The research type is qualitative, with an inductive research approach and interpretivism as the research philosophy. Secondary data collection and thematic data analysis methods are used. The research has high validity and reliability, but is limited by resources and time constraints.

Business Research Project
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Table Contents
1. INTRODUCTION.......................................................................................................................3
2. LITERACTURE REVIEW .........................................................................................................5
3. RESEARCH METHODOLOGY.................................................................................................7
Validity and Reliability....................................................................................................................9
Data Analysis...................................................................................................................................9
5. CONCLUSION..........................................................................................................................12
Recommendation...........................................................................................................................13
REFERENCES..............................................................................................................................14
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Title- To investigate the response of small and medium sized enterprises to COVID-19
disruption: implications for United Kingdom (UK).
1. INTRODUCTION
In recently, it has rapidly outbreak of COVID-19 Pandemic represents unprecedented crisis
that is currently dealing with. Various outgoing events, economic and financial instability can be
identified globally. As a result, it is disrupting the enterprise operations which directly impacts
on the individual’s people lives. Small-medium sized enterprise (SMEs) are considered the
important contributors to the nation’s economy as they constitute about 90% of enterprise and
55% of employment worldwide. Sometimes, it has been experienced with significant deal of
challenge, beside that SMEs owners are one that face challenging situation or condition.
In May 2020, COVID 19 have exceeded 3.6 million in which rapidly increasing all around
the world. At certain point, it will reduce the growth in cases, governments have been introduced
the social distancing with stay at home, restriction in travelling. Due to recession, it has
completely decline in demand and recession. Among the different kind of enterprises, SMEs are
expected to affect the most by disruptions. Hence, small and medium sized enterprise can show
the response in which finding the different way to reopen, operates as usual, while establishing
business position in global marketplace.
In UK, the significance of Small and Medium enterprise and identifying the challenges,
identifying threat or risk during COVID-19. This research will encourage further research
attention in which exploring how innovative modern technologies can assists SMEs to survive
Corona Virus.
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Aim
 To investigate the response of small and medium sized enterprises to COVID-19
disruption: implications for United Kingdom (UK).
Objective
 To determine the positive immediate responses for SMEs in order to recover from
COVID-19 in UK.
 To identify the major challenges face by SMEs in UK during COVID-19
 To analyze threats, risks which posed by market external environment.
Research question
 What are positive immediate responses for SMEs in order to recover from COVID-19 in
UK?
 What are different major challenges face by SMEs in UK during COVID-19?
 How can analyse the threats, risks which posed by market external environment?
Problem Statement
Small and Medium Sized enterprises are consider as important sector in UK, which can
implement as strategic plan in which providing the better employment, economic stability and
export growth or development. However, it has been identified the vulnerability to exogenous
shocks, impact of COVID-19 was largely unexpected by enterprise sector.
1.1 Significance
The significance of research study is to examine the small and medium businesses, provide
the insight into economic impact of COVID-19. It has shed light in both financial as well as non-
financial, significant impact of covid-19 on SMEs and relates to the disruption began. Through
this research study, it helps for researcher to build more understanding towards concept of
Covid-19, which is directly affecting on the Small or medium enterprises.
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2. LITERACTURE REVIEW
Theme: 1 Identify affect of COVID-19 on Small and medium scale business
According to Kumar, Raut and Narkhede (2020) there are different ways to affect the
overall business economy, especially Small and medium enterprises on both supply or demand
sides. In context of supply side, different small based companies are experiencing a reduction in
supply of labour, staff members are unwell and also needed to look after their own children’s.
Due to covid-19, it has been measured to identify spreading viruses so that reduce involvement
of workers towards supply chain process. Therefore, it is directly affecting overall Small/medium
scale business. Lockdown, quarantine in which lead to further and also severe as drops capacity
in term of utilisation. Through this way, it has been increased the interruption which leading to
shortage of parts and intermediate products. On the demand side, It has been identified the
sudden loss in context of demand and revenue of Small or medium enterprise. These are majorly
affected their overall business operational ability and also causes several kind of liquidity
shortages. In this way, many potential consumers are experienced a major loss of income, face
uncertainty, which in turn to decrease its spending as well as consumption.
Papadopoulos, Baltas and Balta (2020) Said that the impact of Corona Virus could have
potentially affecting the overall financial markets, with further decrease confidence level. This
can happen only covid-19 which has rapidly increasingly recession where directly affecting both
small and medium enterprises. However, significant effect on the SMEs, especially sever as high
level of vulnerability and also lower resilience in regardless to the business size.
On the basis of evidence, it has been determined that COVID-19 crisis impact on small
and medium enterprise which indicate as disruption and concern among SMEs. Sometimes, it
often have a minimum suppliers. In some cases, it may have shelter them from shocking. At
initial stage, suddenly reduce the supply chain of enterprise within particular regions. Some kind
of SMEs are particularly vulnerable to the disruption of enterprise networks, supply chain with
connection with larger operators.
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Theme: 2 Positive immediate responses for SMEs in order to recover from COVID-19 in UK
According to Guo, Yang and Guo (2020) it has been focused on the positive immediate
response for SMEs in order to recover economic condition or situation in UK. COVID-19 causes
a global healthy emergency and also slow down the economic condition. Various trade, growth,
investment and other employment are all affected by Covid -19 crisis which are directly impacts
on the achievement of sustainable development goals. In context of international organization, it
is fully dedicated towards the competitiveness of small and medium sizes enterprise.
There are various kind of positive immediate response for SMEs which may help to
mitigate or recover Covid-19. Usually, SMEs have been interacted with Government which has
started to put in place a wide range of measurement. in this way, Small and medium sized
enterprise have tried to create a general policies that are intended to handle the current economic
condition during Covid-19 recession. In UK, it deploying the wide range of policy that can
support for other enterprise and particularly in self-employed during difficult times. SMEs have
shown positive response while focused on the short term liquidity.
Vidmar, Rosiello and Golra (2020) The economic impact of covid-19 pandemic on the
small and medium enterprise which may varies greatly, Sometimes, it depend upon the current
response of both government and SMEs. In context of policy creation by SMEs which needs to
take account and implication of efficient policies and procedures. Small and medium sized
enterprise must ensure that eliminate or remove any kind of challenges regardless low economic
values at the time of Covid-19 recession. Afterwards, it help to start recovery in difficult
situation. An efficient policy development is consider as important role played in the recession
times. In order to improve the critical situation or condition in proper manner.
Theme: 2 different major challenges face by SMEs in UK during COVID-19
As per () challenges of Covid-19 pandemic which can directly impact on UK based
SMEs in early phases. Since, small and medium sized enterprise have been facing challenge or
issues UK country, 5.9 million of SMEs have continued to the mount. Whether it has been
increasing trends of work from home, closing premise etc. therefore, it is completely look
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different way to find out the situation or condition. As per estimation, it has been identified that
500 UK SMEs make a better decision across different areas such as wholesale, retail,
transportation and other service. in this way, it has been conducted by independent ways.
One of the most common challenge is that SMEs face financial pressures which being felt
by enterprise owners. It can be used to maintain its current cash flow level but unable to meet
actual cost which completely beyond 12 months. If in case consumers have become remain
confidence. In this way, it has found that SMEs face issue regarding lower financial condition.
Theme: 3 Analyse threats, risks which posed by market external environment
According to Deschryvere, Mikkola and Conn (2020), there are number of risk that has
arises after pandemic for SMEs such as increasing unemployment rate decrease purchasing
capacity of customers and hence very less start-up able to overcome this challenge. Trade barrier,
custom duties etc. again effect on business of firms as increasing import rate rises price of raw
material. Opening and running SMEs in this situation is one of difficult situation. Inflation rate
has created number of challenges for business as people are less willing to buy or invest in
various types of product as well as services. Pandemic Lock down stop most of Small business
such as Restaurant, Cafe, tours etc. and hence investing on any entrepreneur on this time will be
highly risky as market is not prepared. Coronavirus new strain again create challenges for
European as countries and hence people are less interested in new sector. Food serving business
are in the greatest economic problem as tourist stopped and locals avoided eating out which
creating negativity for new SMEs. There are large number of existing businesses which are about
to close from pandemic challenges and less number of customer's availability. There are number
of strategy that has been followed by the entrepreneur to influence customers such as competitive
price strategy, digital promotion etc. but most of all are failing because of low budget.
3. RESEARCH METHODOLOGY
Research type
It can be explained type of study that are conducted by scholar in order to complete the
research. It is divided into two segments namely quantitative and qualitative. Former one
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consider all aspect of data and large information is gathered and hence take too much time while
later one remain attach to specific topic which gives in depth study of Topic. Qualitative research
has been taken by researcher in order to understand impact of COVID-19 on Small sectors and
again it is specified which again supported by research type taken (Ozili and Arun, 2020).
Research Approach
Research approach can be defined as the way in which information is collected as well as
analysed. Deductive and inductive are two of its type. Deductive emphasizes on checking
existing theory then create hypothesis and then it will reject or accepted depends on investigator
and hence less surety that it will give proper result. Researcher has chosen Inductive research as
in this new theory is generated related to COVID-19 and its effect on market and after
observation/testing pattern also generated in it.
Research Philosophy
It can be discussed as type of mindset of scholar when research is processed by him. It is
separated into two branches namely interpretivism and positivism. First one emphasizes on
human behaviour inclusion when study is processed by scholar while later one focuses on facts,
figure related to it and hence more suitable for accounting, finance etc. Scholar has chosen
Interpretivism for the research as in this indirectly human aspect coming such as customer
behaviour towards SMEs and hence can give better outcomes from the information that has been
collected as well as analysed (Collier and Mayer, 2020).
Data collection
Data collection refers to the method which are chosen by scholar in order to gathered
information from different sources. Primary and secondary are two divided part of it. Previous
one focuses on collection of information directly from participant by surveying as well as taking
interview and it will help in understanding topic more closely and hence positively impact on
final outcomes. Secondary data is taken from publish sources such as Books, journals etc. and
hence decrease time of searching as well as cost of person who is researching. Scholar has taken
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secondary data for the study as after pandemic most of the colleges focuses on it and COVID
restriction again create challenges. It also decreases cost as well as time of participant.
Data Analysis
It can be described the process which are followed by scholar in order to present
information in effective way and thematic as well as SPSS are two of its separated part. In SPSS
software as use for numerical analysis but it is complex in nature and hence less understand by
people. Thematic focuses on presenting data with the help of graph, chart etc. and hence
systematic study can be done on topic by it that's why scholar has taken it for the study (Shen
and et.al., 2020).
Validity and Reliability
Information has been taken from different sources which are authentic and hence it can
be trusted by the author. It can be valid for longer period which will help other people who are
researching in same are and hence can positively impact on their work too. All sources are
mentioned as well as citation has been done of reference so that investigator can visit on the site
and hence reliability of work can be maintained.
Research Limitation
In the starting it was difficult for scholar to gather information as research was very new
and hence authenticity can create multiple challenge but specified topic help in completing
studies on time as well as increase efficiency, quality and productivity of work and impact on
business of firm in long run (Bulin and Tenie, 2020). Time was very less but searching as well as
analysing information has been done in correct way so that quality of work cannot compromise.
Resources are limited but researcher able to manage with it and completed in depth study related
to topic. Amount was large but managing budget help in completing research on time and in
effective way.
Data Analysis
As per the opinion of Albonico, Mladenov and Sharma (2020), there are number of ways
by which SMEs can overcome from issues that are arises from pandemic such as maintaining
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social distancing which decrease chances of COVID infection among members. In the premises
proper cleaning as well as sanitization provided by firm in order to increase profit share and
hence impact on growth of firm in long run. Organization has to evaluate why customers are not
coming to firm or is there any alternative which are associated with it so that work continuation
can be maintained. Online work process can be start in firm as well as give flexible time option
to workers so that they can work efficiently and support in growth of firm. Government has
introduced number of polices which favour SMEs such as in United Kingdom half bill payment
is paid by government in order to attract customer's which are influencing people for purchasing
product as well as services related to food sector. Remote working in information technology
companies will help in working efficiently as well as increase efficiency, quality and
productivity of work and impact on business of organization. Tourism department has to change
the way in which earlier they used to work such as providing arrangements which help in
influencing customers and increase profit share of firm. Technology playing important role in
modern business and hence SMEs to implement it in their work and impact on business of Small
sectors. Corporate taxes, electricity bills etc. must be reduced by Government in order to attract
people for investing in small sectors (Robins and et.al., 2020). Vaccination has been started by
European union which can be highly profitable for again running operation of small business in
effective way and contribute in improving GDP and hence country can be developed. Not every
business is similar and hence policies and guidelines will be created in proper for every business
in effective way so that it can effect on businesses of SMEs.
In the view of Razumovskaia and et.al., (2020), there are many others changes which has
to be implemented in organization to increase effectiveness of business. SMEs has to use social
media for attracting customers such as Facebook, Instagram, You Tube etc. which can help in
gaining customers and increase market share of organization in effective way. Loan interest rate
must be cut down and provide flexible time in return so that organization will able to run various
operation smoothly and without shortage of money. Government grants as well as subsidies must
be introduced in order to attract people for start-ups and hence create a positive environment for
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different type of business. Raw material that was purchased from European countries for various
manufacturing as well as production unit are costly and hence other option such as loon into
Asian market will be effective in attracting customer's and increase profit share of firm. Changes
in supply chain management can help organization in increasing speed of work and positively
impact on business of SMEs. Government has to invest in developing infrastructure for supply
chain management which will speed up and impact on business of firm in long run. Suggestion,
Feedback, opinion etc. must be taken by people with the help of survey what type of safety they
are required and which can help company, and they will likely to purchase product as well as
services. It is believed that vaccination will again motivate people to invest in maintaining
lifestyle as well as purchasing product & services and hence impact on various industries profit
share. It is better to create a system which help in understanding the way in which various
industries following safety as well as taking precaution at workplace and hence impact on
operation. Government has to focus on the way in which various business can run smoothly and
SMEs can grow easily.
Priyono, Moin and Putri, (2020), describe various challenges that arises in business of
various industry such as they are fail to run the business because of customers are taking less
interest in product as well as services after pandemic. Increasing inflation as well as
unemployment directly effecting on purchasing power of customers and hence effect on business
of firm in long run. BREXIT and Pandemic has created challenges in import as well as export to
European Union which again affecting business of SMEs. COVID lock down again break the
bone of number of entrepreneur as they are not able to get customer's and on the contrary
government policies are not favourable in long run of business. Government has strictly
implementing various rules and regulation related to work after coronavirus spread in different
area and hence fewer people go out which ultimately impact on purchasing habits and hence
decrease profit share of number of firms. Most of the restaurants as well as local shops in United
Kingdom are closed down because they are not able to pay heavy taxes as well as not have
proper finance to run business smoothly. There are number of documentation which are required
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as well as process is not an effective way so that it can help in running business smoothly.
Government loan interest rate as well paying back period is not suitable for SMEs which again
effect on business of firm in long run and hence impact on growth of country.
In the opinion of McQuaid and Webb (2020), there are number of risks which arises from
different types of external environment such as raw material cost continuously rising which
again creating challenges and impact on business of firm in long run. Customer taste and trend
keep changes and hence it effects on SMEs which are new business and provide same quality of
goods for particular and hence impact on business of firm. Pandemic again created number of
Lock down in United Kingdom as well as in European countries and hence attracting people for
shops, restaurant etc. are not possible in present situation and hence impact on business of firm in
long run. It can also be evaluated from the report which help in influencing customer's and
improve market position and it can be easily understood from the that people are not willing to
come for shopping in physical stores and hence organization has to work on it. There are number
of other reasons which are also responsible in effective management of supply chain such as
infrastructure quality is poor and people take less interested in various types of business ad hence
profit share of firm decreased. It can be analyses from the present environmental condition which
can effect on business such as there are number of climatic changes happened around the world
which create barrier for growth of number of industry for example: Raw material cost has
sharply rises which can impact on business of company and hence inflation rate has been surge
around the world.
5. CONCLUSION
It can be evaluated from business research project that there are number of challenges
faced by SMEs which impact on growth of country. Pandemic has left no part of world which
can remain untouched in term of economical as well as social changes. Inflation and
unemployment rate around the world increases which can again create number of challenges for
people to purchase product as well as services and hence impact on business of Number of SMEs
around the world. External environment also impacted on number of entrepreneur such as
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government policy, subsidies, grants etc. are not supportive in nature and hence people are less
willing to take invest in any type of Venture. Report describe number of issues that arises around
the world in term of opening as well as running of SMEs around the world which can become
barrier in improving financial performance of any country. There are number of authors which
gives different opinion related to topic which help in understanding topic related to SMEs and its
impact on growth of a country. However, vaccination and scientific efforts also discussed in
report which can be done in order to restart different types of Small sector business and effect on
business of firm in long run. Research methodology also explain in the report which has been
followed by the scholar in order to conduct study such as it describe type, approach, philosophy,
collection as well as analysis method. It gives better reflection on the area that has been
addresses in the report. Data analysis is secondary and many authors opinion explain in it which
gives better idea related to topic. In the end conclusion as well as recommendation will be given
related to topic which explain summary of overall all work and in the end proper ideas has been
given.
Recommendation
 There are number of changes which can be done in order to impact on business of SMEs
such as change in government policy as well as procedure for example less
documentation for opening entrepreneur and less tax related to it.
 Remote working has to be encouraged in organization which help in doing work
efficiently and hence impact on business of firm. Flexible working hours can also be
introduced by company which help employees working in effective as well as modern
way.
 Interest rate of government loans must be reduced so that people can take loans for
different type of business and impact on growth of firm in long term. There are number
of schemes that has been implemented by number of countries and hence United
Kingdom can take help in Supporting Business of Small sectors.
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 Infrastructure has to be developed by government in order to improve supply chain
management as people are willing to purchase product online compare to physical stores
and hence it will help in smooth run of business.
 Entrepreneurship grants as well as subsidies must be provided by government in order to
attract local business and corporate taxes must be decreased.
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REFERENCES
Book and Journals
Albonico, M., Mladenov, Z. and Sharma, R., 2020. How the COVID-19 crisis is affecting UK
small and medium-size enterprises. McKinsey & Company.
Bulin, D. and Tenie, I.P., 2020. Preliminary assessment of the COVID-19 pandemic impact on
the tourism industry. Global Economic Observer.8.(1).pp.41-46.
Collier, P. and Mayer, C., 2020. Reforming the UK financial system to promote regional
development in post-COVID Britain. Oxford Review of Economic Policy,
36(Supplement_1), pp.S270-S280.
Deschryvere, M., Mikkola, M. and Conn, S., 2020. On the structural barriers to public innovation
support for SMEs and the opportunity COVID-19 can offer to overcome these barriers.
Journal of Innovation Management.8.(2).pp.16-25.
Guo, H., Yang, Z. and Guo, A., 2020. The digitalization and public crisis responses of small and
medium enterprises: Implications from a COVID-19 survey. Frontiers of Business
Research in China. 14(1). pp.1-25.
Kumar, M.S., Raut, R.D. and Narkhede, B.E., 2020. Applications of industry 4.0 to overcome the
COVID-19 operational challenges. Diabetes & Metabolic Syndrome: Clinical Research
& Reviews. 14(5). pp.1283-1289.
McQuaid, R. and Webb, A., 2020, August. The Importance of SMEs as Innovators of Sustainable
Inclusive Employment: Some Issues Resulting from Shocks to the Economy Imposed
by the COVID-19 Pandemic. In The Importance of SMEs as Innovators of Sustainable
Inclusive Employment (pp. 33-46). Rainer Hampp Verlag.
Ozili, P.K. and Arun, T., 2020. Spillover of COVID-19: impact on the Global Economy.
Available at SSRN 3562570.
Papadopoulos, T., Baltas, K.N. and Balta, M.E., 2020. The use of digital technologies by small
and medium enterprises during COVID-19: Implications for theory and
practice. International Journal of Information Management. 55. p.102192.
Priyono, A., Moin, A. and Putri, V.N.A.O., 2020. Identifying Digital Transformation Paths in the
Business Model of SMEs during the COVID-19 Pandemic. Journal of Open Innovation:
Technology, Market, and Complexity.6.(4).p.104.
Razumovskaia, E and et.al., 2020. The effectiveness of Russian government policy to support
smes in the COVID-19 pandemic. Journal of Open Innovation: Technology, Market,
and Complexity.6.(4).p.160.
Robins, N and et.al., 2020. Financing climate action with positive social impact: how banking
can support a just transition in the UK. Grantham Research Institute on Climate Change
and the Environment, LSE: London, UK.
Shen, H and et.al., 2020. The impact of the COVID-19 pandemic on firm performance. Emerging
Markets Finance and Trade.56.(10).pp.2213-2230.
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Vidmar, M., Rosiello, A. and Golra, O., 2020. Resilience of New Space Firms in the United
Kingdom During the Early Stages of COVID-19 Crisis: The Case for Strategic
Agility. New Space. 8(4). pp.172-178.
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