Impact of COVID-19 on Small and Medium Sized Enterprises in the UK

This research report investigates the response of small and medium sized enterprises to COVID-19 disruption in the United Kingdom. It highlights the challenges faced by SMEs, identifies potential opportunities for recovery, and analyses the effectiveness of national schemes and policy interventions to support SMEs. The report is based on a literature review and data analysis of secondary sources.

Alternative project on
enterpreneurship

Table of Contents
Project Title: “To investigate the response of small and medium sized enterprises to COVID-19
disruption: implications for the United Kingdom (UK)”.................................................................1
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
PROBLEM STATEMENT..............................................................................................................1
LITERATURE REVIW...................................................................................................................1
To identify what are the positive immediate responses for SMEs should be, in order for them
to recover from COVID-19 in the United Kingdom, thus to be able to ensure stable business
continuity................................................................................................................................1
To highlight the present business decision-making that SMEs are undertaking and to identify
the major challenges being faced by SMEs in the UK...........................................................1
To analyse the threats posed by the market external environment; and also, potential
opportunities for SMEs that are suitably placed and prepared. The effectiveness of National
Schemes and policy interventions to support SMEs are also considered in order to sustain
SMEs......................................................................................................................................1
DATA ANALYSIS..........................................................................................................................1
RECOMMENDATIONS.................................................................................................................1
LIMITATIONS................................................................................................................................1
CONCLUSION................................................................................................................................1
REFERENCES................................................................................................................................2

Project Title: “To investigate the response of small and medium sized
enterprises to COVID-19 disruption: implication for the United Kingdom
(UK)”.
INTRODUCTION
Small and Medium size enterprises are considered as the life line of UK economy as well as
develop effectual outlook in above 60 countries. Moreover, the pandemic affect can cause for the
loss of life as well as severe individuals suffering impacts. Additionally, the SME sector faced
high level impact upon United Kingdom economy that are associated with transmission channel,
suppliers, monetary markets and many more. In addition to this, these factors are related with
firm and obtain high level effectiveness to perform efficiently and formulated various strategies
for overcoming from the challenges into several perspectives. This investigation involves the
research report on COVID-19 and their impacts of SMEs. Also, this would represent “to
investigate the response of small and medium sized enterprises to COVID-19 disruption:
implication for the United Kingdom (UK)”.
MAIN BODY
PROBLEM STATEMENT
Small and Medium sized Enterprises (SMEs) develops a crucial sector within UK. Moreover,
they are strategically essential players for facilitating employment, economic stability and export
development. Though, they may also be vulnerable for exogenous shocks. Additionally, the
affects of COVID-19 was hugely unexpected through business sector it is proving to be a
challenge for continuity as well as survival within businesses into SME industry.
Research Aim:
“To investigate the response of small and medium sized enterprises to COVID-19
disruption: implication for the United Kingdom (UK)”.
Research Objectives:
 To identify the different positive immediate responses for SMEs to recover from COVID-
19 in the United Kingdom.
 To highlight the present business decision-making that SMEs are undertaking and to
identify the major challenges being faced by SMEs in the UK.
1

 To analyse the threats posed by the market external environment; and also, potential
opportunities for SMEs that are suitably placed and prepared.
 The recommend effectiveness of National Schemes and policy interventions to support
SMEs are also considered in order to sustain SMEs.
Research Questions
 What are the different positive immediate responses for SMEs to recover from COVID-
19 in the United Kingdom?
 What is the present business decision-making that SMEs are undertaking and to identify
the major challenges being faced by SMEs in the UK?
 What are the threats posed by the market external environment; and also, potential
opportunities for SMEs that are suitably placed and prepared?
 What is the effectiveness of National Schemes and policy interventions to support SMEs
are also considered in order to sustain SMEs?
Rationale of Research
One of the key reasons to perform respective research is to investigate the response of small and
medium sized enterprises to COVID-19 disruption: implication for the United Kingdom (UK).
Additionally, this would also assists researcher into both context of professional and personal. In
respect to professional aspects, this obtains acknowledgement about the opportunities which
SMEs has to tackle difficulties that rise because of COVID-19 in UK. In respect to personal
aspect, this assists to learn as well as develop skills like data collection, data analysis, time
management and others. However, this would help researcher to perform further investigation
effectually and obtain the opportunities as well.
LITERATURE REVIW
To identify the different positive immediate responses for SMEs should be, in order for them to
recover from COVID-19 in the United Kingdom, thus to be able to ensure stable business
continuity.
According Sharma (2021), the outbreak of the COVID 19 has directly lead to impacting the
performance and profitability of the small business around the UK (UK small and medium-size
enterprises: Impact of the COVID-19 crisis, 2021). The small and medium size business are
considered to be the major contributor in the growth and development of the economy, they are
2

nearly account for 50% of total revenue generated by the UK businesses. But the effect covid 19
has directly impacted the performance of the SME, around 80% of the SME has stated that there
is immense fall in the revenue of the organisation. The employability rate of the SME has also
been impacted drastically. Large number of employees lost their jobs in the sector due to the
situation prevailing around the globe. In addition to this, there was also huge impact on the
demand and supply leading to impact the operational activities of the organisation. Large number
of organisation were forced to shut down their operation due to continuously facing loss. This all
lead to creating huge impact on the profitability and performance of the business effectively.
To highlight the present business decision-making that SMEs are undertaking and to identify the
major challenges being faced by SMEs in the UK.
The drastic COVID-19 outbreak has directly affected the lives, societies and business firm. The
performance of business operations has been directly affected. But in changing atmosphere, this
is crucial for firm for undertaking corrective measures as well as overcomes the circumstances.
Moreover, this becomes crucial to undertake appropriate decision for surviving within market
area. For effectually deal with current circumstances, huge number of SMEs are considering
huge steps with situations like firm are moving towards utilisation of developing online
technology rapidly. Additionally, strict safety measures are being considered through entity. The
several challenges which ventures faced incorporates identifying clients, funds to initiate new
business, funds to develop the business, competent staff, connection and network and others.
Also, the entities are efficaciously deal with those problems by executing new technologies as
well as challenging its tactics based upon the situations. The utilisation of social media allows
the company to deal with issues of finding consumers, as using social media makes this simple
for firm with directly connect and interacts with potential clients.
To analyse the threats posed by the market external environment; and also, potential
opportunities for SMEs that are suitably placed and prepared.
As per the view point of Hanard (2021), the outbreal of the covid 19 has also lead to offering
number of opportunities for the small and medium size business around the globe
(Entrepreneurship and Covid-19: Challenges and opportunities, 2021). Right direction and path
as well as proper evaluation of those opportunities will help the entrepreneurs to be successful
and continue to grow in the marketplace and enhance their overall performance effectively. The
entrepreneurs are expecting their business to grow and be larger than the pre pandemic. Around
3

72.5 % of entrepreneurs are nearly expecting to enhance their employees size. In addition to this
the business are also seeking opportunities to acceleration of their existing business mainly
moving towrads the growing sector of online service. Online business is considered to be one of
the most growing business with large number of customers moving towards it. There is also
opportunities of saving cost in terms of increasing remote working, it help small business to save
their many cost. Many organisation also seek opportunities in terms of shift in the customers
behaviour due to the pandemic. All the growing opportunities will help the entrepreneurs to
enhance their performance and grow in the marketplace effectively.
The recommend effectiveness of National Schemes and policy interventions to support SMEs are
also considered in order to sustain SMEs.
As per the view point of Court (2021), there are number of policies and interventions were made
by the government in order to support the small and medium business effectively and promoting
them to work effectively. The government supported large number of small business through
offering them financial support during the covid 19. government also offered the wages for many
workers in case of organisation was unable to pay off to their workers (Entrepreneurship and
Covid-19: Challenges and opportunities, 2021). The government also made policies in term of
safety and security procedure needed to be followed in order to smoothly carry their work. The
effectively financial support is offered to the small and medium business as they can smoothly
carry their activity and survive in the market.
RESEARCH METHODOLOGY
Research Methodology
It is defined as the important and systematic procedure of analysing gathered information
in order to interpret it into meaningful and effective manner. In addition to this, it is the specific
process that is used to identify, choose, analyse and interpret data about a topic.
Introduction to chapter
It is one of the significant chapter of a study as it include all the data collection process,
techniques and tools used by researcher to conduct the research along with the justification. In
addition to this, the present study is based on secondary information and to analyse such
information, literature review has been used.
4

Introduction
Research methods is one of the important part of study as it help researcher to develop a
valid and reliable conclusion in a timely manner. In addition to this, it introduces as a systematic
investigation that includes defining research problem, formulation research question, gathering &
analysing information and so on (De Hertogh, 2018). For the present study, qualitative study is
conducted and the main reason to select is it help researcher to gather and evaluate secondary
information in an appropriate and accurate manner.
Research onion
It is a framework that was developed by Saunders and is described the stages by which an
investigator go through in order to develop an effective methodology. The framework includes
various layers and is given below:
Research Philosophy
There are mainly two forms of research philosophies that is interpretivism and positivism
but as per the research topic, Interpretivism philosophy is suitable as it help in gathering as well
as evaluating secondary information without any difficulty. In addition to this, interpretivism
philosophy is focuses on secondary information that help researcher in attaining valid &
appropriate results in an effective manner.
Research Approach
The two types of research approaches are inductive and deductive approach and to carry
out this investigation, inductive research approach is appropriate and useful as it follow research
questions with purpose to enhance scope of study.
Research strategy
There are different forms of research strategies that is interview, experimental, case study,
action research, literature review and many more (Flick, 2020). In the present study, literature
review has been applied as it help in gathering secondary data about the impact of COVID-19 on
UK SMEs.
Data collection
There are mainly two forms of data collection method that is primary and secondary
method and the present study is completely based on secondary data. In order to collect
secondary data, various sources is taken into consideration that is books, articles, journals and so
5

on (Lê and et. al., 2019). This help researcher to gather actual information on research topic
which leads to development of valid and reliable conclusion.
Data analysis
It is defined as the process by which collected data is analysed by the researcher and it is
mainly of two forms that is frequency distribution analysis and thematic analysis. In the present
study, thematic analysis is used as it help in analysing and presenting secondary information in
an appropriate and effective way.
Ethical considerations
It is significant for researcher to consider all the ethical principles so that all the activities
associated to the study is execute without any interruptions and delay. The various ethical
principles are anonymity, confidentiality, informed consent and so on (Mukherjee, 2019).
Following of all this principles assist researcher to attain objectives within set time frame.
6

DATA ANALYSIS
Introduction
In this chapter the data will be able to present the findings and make sure to complete
entire project that are linked with appropriate methods. This is basically a secondary research
analysis that helps in providing data and manage qualitative data that will be able to defined the
key themes and make thematic analysis (McKay, Bastian and Lindberg, 2021). This further
include that presented and discuss the Covid-19 and its impact on SME industries in UK based.
Data analysis
Theme1: Impact of Covid-19 on SME
Most of the SME's accountable for 50% of the revenue generated by UK businesses and
mainly 44% are counter for the labour forces. With the outbreak of Covid-19 pandemic crises the
economy and individual crises affect majorly. Below graph is related to UK based SME that face
a major impact on their revenue.
7
Illustration 1: UK small and medium-size enterprises: Impact of the COVID-19 crisis,
2021

Interpretation
From the above graph, it is analysed that in August, May and November the number of
SME's that have high or low impact on their revenue. The figure shown that an improvement on
different business which are similar to each other. In August and May of 2020, 57% and 60%
respondents said that they would be work out of businesses in 12 months. Whereas, in the line
with major improving trends, revenue reported by UK and SME to achieve respondents which
were stronger at the time of November 2020. Furthermore, in addition to this it is analysed that
in May 2020, almost 80% of the respondents said that their revenues are fallen as because of the
negative impact of Covid-19 in UK. Moreover, the figuring amount had been dropped to analyse
65% by November 2020, although there are some factors which are distant make worse other
than different revenue process. Although 90% of Small, Medium enterprises in managing
accommodation whereas reduction in revenue in November 2020 (Sachs and et.al., 2021).
8

Theme 2: Challenges faced by SME's due to Covid-19 in UK
Interpretation:
The SME's are basically having large amount of challenges which affect their sales and
revenue in different formats. From the above table it is analysed that arising funds for starting
business is one of the top challenge for SME's. Before pandemic it was 64% whereas now it
increased to 80%. Another share of entrepreneurs with the impact of business challenges 64%
before pandemic and now it increased to 72% during the pandemic. Another challenge is related
to self doubt and fear was reported as a challenges are arises by 58% of entrepreneurs during the
lock-down. It was 50% before the lock-down, so it is further become the challenge for the SME's
to motivate themselves during lock-down process. Approximately, half of entrepreneurs a new
businesses for appoint skilled employees during the pandemic 52% which are compared to 39%
before pandemic. In addition to this when it comes to locations, region and make geography was
reported as a challenge for most of the SME's. From 17% to 39% the change happened during
the pre and post pandemic stages. In last the proportion which are reported for inclusion is based
9
Illustration 2: How Does COVID-19 Affect Challenges Facing Entrepreneurs?, 2020

on race, ethnicity and income factors which become the challenge rose from 17% to 28% from
2019 to 2021.
Theme 3: opportunities arises while facing challenges due to Covid-19
Interpretation:
From the above graph, it is interpret that the more than half of entrepreneurs saw some
positive impact or opportunities of Covid-19 pandemic on their businesses. The very first impact
is business acceleration, and it is analysed approx 82% of the entrepreneurs said they have high
positive impact on the business acceleration growth. Whereas, 49% said they have higher
business efficiency and 19% respondents said that they find long term opportunities in their
SME's.
10
Illustration 3: Positive long term impact, 2021

Theme 4: Different policies and interventions made by government
Interpretation:
From the above graph, it is interpret that government provide a support to major SME's
that are related in London and Non-London. In London 40% SME said government guaranteed
low interest rate whereas, outside London 29%. furthermore, some of them are said that
government grant cash more in outside London that is 28% vs. 19% is in London based SMEs.
11
Illustration 4: Government supplied applied for SME, 2021

Discussions
Research question 1: What is the impact of COVID-19 on small and medium enterprises
within UK?
From the above literature review, it is analysed that most of the UK based companies are
facing positive and negative impact on the SME. This is analysed that it become threatened to
generate private sectors and employees for managing all public and private sector organisation.
Many of the entrepreneurs are seen that this pandemic make positive and negative impact on the
organisations and growth of the company. Many of the companies face real challenges to sustain
their business.
Research question 2: What is the present business decision-making that SMEs are
undertaking to face challenges arise due to COVID-19 in UK?
This research discussed different factors which are related to decision-making process in
SMEs which are mainly used to face challenges that arise in Covid-19 in UK. Some of the major
challenges are related to finding valuable customers, funds to start for business growth, skilled
employees and provide them training. In addition to this, social support, time to devote in
businesses are the major challenges which SMEs faced in UK sectors.
Research question 3: What are the opportunities that SMEs have to face challenges arise due
to COVID-19 in UK?
The research further indicate that building insights it analysed that different trends for the
Post-Covid economy and on targeted support measures to help UK SMEs thrive. They analysed
different opportunities which are associated to business acceleration, opportunities, efficiency
and refocus on the growth of the company in UK market. This will help them to gain higher level
of competitive advantages.
Research question 4: What are the policies and interventions made by the government to
support SME’s in dealing with situation of COVID-19?
From the above secondary data, it is analysed that UK government adopt major policies
and interventions programmes to make growth in SME and support them to fight with Covid-19.
Some of them are related to government guaranteed low interest loans, cash based grants,
deferral of income tax and other major benefits which are taken by SMEs of UK. These are
associated to support the companies and make a future long term path in addressing the
challenge and make effective growth in overcome the challenges.
12

Chapter 6- Conclusion and Recommendations
Conclusion
From the above discussion, it has been concluded that COVID-19 has adversely impact on
the overall purpose and functioning of an organisation. In addition to this, it is analysed that there
are various strategies that is adopted by small businesses to deal with the situation of COVID-19
that is development of search engine, using of digital platforms, online payments, digital
marketing and manty more. All this help SMEs to recover their losses easily and to maintain its
performance by raising its customer base level that take place through digital platforms.
Moreover, it is determined that there are many initiatives taken up such as extend timeframes for
payments of custom duties & fees, enable paperless trade, invest in digital infrastructure, change
policies and so on. All this initiatives and policies help company in dealing with situation of
COVID-19 and to execute activities in a proper manner. Furthermore, it is analysed that using
secondary information assist researcher to gain in-depth knowledge about research topic and gain
valid and reliable outcome in an effective manner. In the last, it is determined that using of an
effective research method is vital for the study as it help in attaining objectives within stipulated
time period.
Recommendations
 It is recommended to use the digital payment that can be effective and promote to deal
with customer more effectively. This is the way that can allow customer to stay safe from
getting risk of COVID virus and allow to perform the operation with better effect.
Through using the digital payment, individual can get able to transfer their payment
online without any difficulty. This can help to effectively and easily process the payment
within less few seconds. Digital payment also helps in promoting the easy payment and
enhance the customer purchasing behaviour. Due to this, customer like to purchase more
and help to get better business to small and medium enterprises.
 It is also recommended to use mask and promote customer to use mask that can enable to
apply the safety measures at store and workplace. Through apply, this safety concern,
SME’s can get better opportunity to deal with customer without risk of getting infected
through virus. This can be effective and help to promote the small and medium
13

enterprises business to earn more and make higher profit without any risk of health
(Skinner and et.al., 2021).
 It is highly recommended that the SMEs should use effective strategies related to major
hygiene factors. As after the Covid-19 impact many of the individuals are more focused
on hygiene and health concision. So the companies should work effectively and manage
high profile growth in sustainable and eco-friendly aspects. These will help the
companies to work effectively and manage the pandemic challenges in UK market.
Through using hygiene factors people can have lower risk of getting infected through
virus and help to perform the purchase easily with better effect. This wil further helps in
addressing the issue and gain higher level of efficiency in SMEs and UK economy.
14

REFERENCES
Books & Journals
Aidoo, S.O., Agyapong, A., Acquaah, M. and Akomea, S.Y., 2021. The performance
implications of strategic responses of SMEs to the covid-19 pandemic: Evidence from
an African economy. Africa Journal of Management, 7(1), pp.74-103.
Ayed and et. al., 2019. Vision-based serious games and virtual reality systems for motor
rehabilitation: A review geared toward a research methodology. International journal of
medical informatics, 131, p.103909.
Barnes, S., Hillman, R., Wharf, G. and MacDonald, D., 2021. The impact of COVID-19 on
corporate fragility in the United Kingdom: Insights from a new calibrated firm-level
Corporate Sector Agent-Based (CAB) Model.
De Hertogh, L. B., 2018. Feminist digital research methodology for rhetoricians of health and
medicine. Journal of Business and Technical Communication, 32(4), pp.480-503.
Durst, S., Acuache, M.M.G.P. and Bruns, G., 2021. Peruvian small and medium-sized
enterprises and COVID-19: Time for a new start!. Journal of Entrepreneurship in
Emerging Economies.
Flick, U., 2020. Introducing Research Methodology: Thinking Your Way Through Your Research
Project. Sage.
Lê, J.k and et. al., 2019. Why research methodology in strategy and management remains as
important as ever. In Standing on the Shoulders of Giants. Emerald Publishing
Limited.vvv
McKay, F.H., Bastian, A. and Lindberg, R., 2021. Exploring The Response Of The Victorian
Emergency And Community Food Sector To The COVID-19 Pandemic. Journal of
Hunger & Environmental Nutrition, pp.1-15.
Mukherjee, S.P., 2019. A guide to research methodology: An overview of research problems,
tasks and methods.
Rix and et. al., 2019. Indigenist and decolonizing research methodology.
Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G. and Woelm, F., 2021.
Sustainable development report 2020: The sustainable development goals and covid-19
includes the SDG index and dashboards. Cambridge University Press.
Shelton, K., Haynes, C.A. and Creghan, K.A., 2018. Fundamentals of Delphi research
methodology. In Handbook of Research on Innovative Techniques, Trends, and Analysis
for Optimized Research Methods (pp. 233-257). IGI Global.
Skinner, A.T., Godwin, J., Alampay, L.P., Lansford, J.E., Bacchini, D., Bornstein, M.H., Deater-
Deckard, K., Di Giunta, L., Dodge, K.A., Gurdal, S. and Pastorelli, C., 2021. Parent–
adolescent relationship quality as a moderator of links between COVID-19 disruption
and reported changes in mothers’ and young adults’ adjustment in five countries.
Developmental psychology, 57(10), p.1648.
Volkova and et. al., 2018. Concept in the trans textual space of artistic discourse. Literature study
research methodology. Modern Journal of Language Teaching Methods, 8(6), pp.13-31.
Online
Entrepreneurship and Covid-19: Challenges and opportunities, 2021. [Online]. Available
through: <https://www.kcl.ac.uk/business/assets/PDF/research-papers/country-report-
15

uk-entrepreneurship-and-covid-19-challenges-and-opportunities-an-assessment-of-the-
short-and-long-term-consequences-for-uk-small-businesses.pdf>.
How Does COVID-19 Affect Challenges Facing Entrepreneurs?, 2021. [Online]. Available
through: <https://www.kauffman.org/entrepreneurship/reports/how-covid-19-affects-
challenges-facing-entrepreneurs-by-business-age/>.
UK small and medium-size enterprises: Impact of the COVID-19 crisis, 2021. [Online].
Available through:
<https://www.mckinsey.com/industries/public-and-social-sector/our-insights/uk-small-
and-medium-size-enterprises-impact-of-the-covid-19-crisis>.
16