Impact of COVID-19 on UK SMEs

This report aims to identify the ways in which small and medium businesses in the UK were affected during the pandemic from May 2020 to February 2021. It discusses the decline in revenues, default on loans, and problems in retaining employees faced by SMEs. The report also highlights the impact on different sectors such as hospitality, logistics, construction, and agriculture. It further explores the government programs and schemes introduced to support SMEs during this period.

How were small and medium
businesses in the UK affected
during the pandemic May
2020February 2021

Table of Contents
INTRODUCTION...........................................................................................................................4
Report aim ...................................................................................................................................4
Topic area ....................................................................................................................................4
2. Literature Review.........................................................................................................................4
2.1.................................................................................................................................................4
2.2 ................................................................................................................................................5
2.3 ................................................................................................................................................5
2.4 ................................................................................................................................................5
Literature comparison .....................................................................................................................6
Methodology ...................................................................................................................................6
3.1 Research question..................................................................................................................6
3.2 Research Methodology..........................................................................................................6
4. Project timeline............................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Report aim
The main aim of this report is to identify the ways in which the small and medium
businesses in the UK were affected during the pandemic from May 2020 till February 2021.
Topic area
The pandemic has forced the business to close down and reduced their earnings. As the
pandemic affected lives of various people and affected various areas of economy. A bad hit was
also on the small and medium businesses of UK during the pandemic. Many of the small and
medium businesses get dependent upon the UK government for their living and earnings. Also
this pandemic has forced many small and medium businesses to get shut down as they were not
able to even cover their costs. All these tough times have forced people to change the ways of
living and operating the businesses. From their traditional methods of operating the small and
medium businesses have to shift to more advanced and technology driven systems.
2. Literature Review
2.1
How the COVID-19 crisis is affecting UK small and medium-size enterprises. Sharma, R.,
Mladenov, Z. and Albonico, M (2020)
According to Sharma, R., Mladenov, Z. and Albonico, M (2020) The small and medium
enterprises of UK comprises larger part in the UK economy and due to the pandemic, small and
medium businesses are greatly affected and a decline in the revenues has seen in the same. The
small and medium businesses were seen to do default on loans and also were facing problems in
retaining the employees. As per the survey it was found that the major small and medium
business that were negatively impacted were hospitality sector, logistic, construction and
agriculture as they were encountered with lower revenues. While the small and medium
businesses that were impacted little less were scientific, education etc. Also, the UK government
have launches a programme names Furlough program in which some small and medium
businesses have planned or are planning to take advantage under this program.

2.2
Coronavirus (COVID-19): SME policy responses. (2020 )
As per the article it was found that around 37% of the firms have made or considering
redundancies in May 2020. around 35% of the firms are scared that their businesses will not
reopen and some also fears that they have to close their businesses temporarily. As per the
survey there are certain small and medium businesses that were impacted majorly such as
construction, retail, accommodation, food services etc. also the earning of the employees in
small and medium businesses were impacted negatively as compared to the large businesses.
Due to the pandemic there was a widening of liquidity gap in the small and medium businesses.
2.3
Brown,R (2020)
According to the article the small and medium businesses in Scotland have been heavily
impacted by the pandemic in financial and economic terms. The capital investment in into the
small and medium businesses have been fallen immensely and also these businesses saw a
liquidity problems due to which the SMEs were not able to pay their debts. The savings and
financial resources are at verge of emptiness and also some businesses are at the stake of shutting
down. Internal sources are very important for running the small and medium businesses and due
to pandemic there have been crisis for the same. The major hit of pandemic was on retailers or
the restaurants but the delivery companies are showing good process as people in UK are
preferring to order online.
2.4
How UK SMEs can weather the impact of Covid-19. (2020)
From the article it is found out that as the UK's small and medium businesses were
overcoming the impact of Brexit, the businesses got again hit by the pandemic and the sales of
small and medium businesses started declining. There were many issues that the small and
medium businesses were facing such as these businesses have to manage their cash flows even
when their sales have declined and have to pay different costs such as rent, salaries, inventories
etc. Also these businesses have to cope up with the disrupted supply chain. This pandemic have
influenced the small and medium businesses in using the technology and software to carry on

their businesses in the odd situations. The pandemic have forced these businesses to allow their
employees work from home and some schemes were also designed to prepare these small and
medium businesses for long term and to reduce the negative impact of pandemic on these
businesses.
Literature comparison
All the articles and sources shows that there was great impact of pandemic on the small
and medium businesses and the sales of these businesses declined during this period. And
sources 2.1, 2.2 and 2.3 highlights that there were certain small and medium businesses that were
negativity impacted such as retailers, accommodation and construction but the education and
delivery services had little impact as they have to change their way of operating. As per the
sources of 2.1 and 2.4 the UK government have also introduced certain schemes and
programmes to help these small and medium businesses.
Methodology
3.1 Research question
How were small and medium businesses in the UK affected during the pandemic from
May 2020 to February 2021?
3.2 Research Methodology
For collecting the relevant information regarding the research project, primary research
will be carried out. For carrying out the primary research firstly the survey will be conducted and
questionnaires will be used to collect information from the small and medium business owners.
Further, analysis will done by using thematic technique. The information which is there in
articles and books will be compared, confirmed and contradicted with the collected information.
4. Project timeline
Creation of research questionnaire: 2nd March - 9th March
Conducting the surveys of the 20 business owners : 9th March - 16th March
Analysis of data : 16th March - 23rd March
Gathering additional information: 23rd March - 30th March
Comparison of the research: 6th April - 15th April

Writing the Research project: 15th April - 22nd April
Revision of research project : 22nd April – 29th April
The date of submission : 14th May, 2021

REFERENCES
Brown, R., 2020. The Impact of Covid-19 on Scottish Small and Medium- Sized Enterprises
(SMEs): Prognosis and Policy Prescription. [Online]. Available through:<The Impact of
Covid-19 on Scottish Small and Medium- Sized Enterprises (SMEs): Prognosis and
Policy Prescription>. [Accessed on 24 February, 2021].
Coronavirus (COVID-19): SME policy responses. 2020. [Online]. Available
through:<http://www.oecd.org/coronavirus/policy-responses/coronavirus-covid-19-sme-
policy-responses-04440101/>. [Accessed on 24 February,2021].
How UK SMEs can weather the impact of Covid-19. 2020. [Online]. Available
through:<https://www.iod.com/news/news/articles/How-UK-SMEs-can-weather-the-
impact-of-Covid-19>. [Accessed on 24 February, 2021].
Sharma, R., Mladenov, Z. and Albonico, M. 2020. How the COVID-19 crisis is affecting UK
small and medium-size enterprises. [Online]. Available through:
<https://www.mckinsey.com/industries/public-and-social-sector/our-insights/how-the-
covid-19-crisis-is-affecting-uk-small-and-medium-size-enterprises>. [Accessed on 24
February, 2021].