Investigating COVID-19's Influence on UK SMEs: A Research Project

This research project investigates the impact of the COVID-19 pandemic on small and medium-sized enterprises (SMEs) in the United Kingdom. It examines the challenges faced by these businesses, including disruptions to operations, financial difficulties, and the need for adaptation. The project explores the decision-making processes of SMEs during the pandemic, focusing on strategies for survival and recovery. The study also analyzes the effectiveness of UK national schemes designed to support SMEs, such as loan programs and financial assistance. Furthermore, the research identifies opportunities for SMEs to adapt to the changing business environment, including technological advancements and new market trends. The project utilizes literature review, and case study analysis to provide a comprehensive overview of the pandemic's influence on UK SMEs and offers recommendations for future resilience and growth. The project also provides information on the specific case of Rowlinson Knitwear Ltd, including its responses to the pandemic.

Research Project On Entrepreneurship
(To determine influence of COVID-19 on small and
medium firms. A study on United Kingdom.)

Table of Contents
INTRODUCTION...........................................................................................................................3
Overview of the topic.............................................................................................................3
Background of an organisation...............................................................................................3
Research aim and objective....................................................................................................3
LITERATURE REVIEW................................................................................................................5
Impact of COVID 19 on small and medium enterprises within UK .....................................5
Decision making that small and medium firms are undertaking during the COVID- 19
pandemic ................................................................................................................................5
Ways through which SME survived during COVID 19 pandemic........................................6
Effectiveness of the UK national schemes in supporting small and medium firm during
COVID-19 pandemic..............................................................................................................7
RESEARCH METHODOLOGY.....................................................................................................9
Discussion......................................................................................................................................10
CONCLUSION AND RECOMMENDATIONS .........................................................................18
Conclusion ...........................................................................................................................18
Recommendation..................................................................................................................18
REFERENCES .............................................................................................................................19

INTRODUCTION
Overview of the topic
Entrepreneurship is a quality of developing, organising and running a business
organisation with many uncertainties to earn a profit. Starting a new business is an example of
entrepreneurship. It uses factors like labour, land, natural resources and capital to earn profits. Its
vision can be defined as risk taking and innovation. Small and medium sized enterprises are
independent organisations which have fewer than a decided number of workers. The number of
employees are not same, it is different across countries. The maximum number of employees are
250 in some countries while in some SME have more than 500 employees. Although these firms
are small in size but it plays a vital role in an economy. It employs large number of people and
helps in creating innovation (Alvarez and Barney, 2020). Government's intervention is also there
as it provides incentives, favourable taxes treatment, providing loans with easy process and low
interest rates to help them in businesses. SME enterprises are the lifeblood of an economy of UK,
it has contribution of 50 percent out of the total revenue of all the businesses of UK. The effects
of Covid 19 crisis was immense like default on loans, to retain workers and so on (Wennberg and
Anderson, 2020).
Background of an organisation
Rowlinson Knitwear Ltd is a manufacturer of apparels. It is a company which
manufactures clothes for students and knitwear. It is a private limited company incorporated on
20 September, 1972. It is a medium-sized enterprise, that has employees between 50 to 250 and
turnover of 10 to 50 million. It is a company which does not supply directly to the customer even
school uniforms are supplied to schools and shops that come under schools (Sydow, Schreyögg
and Koch, 2020). It provides fair and long-lasting clothing in nominal prices through
independent retailers. While production of products they are mainly concerned for providing
good quality in its products and services.
Research aim and objective
Research Aim
“To determine influence of COVID-19 on small and medium firms. A study on United
Kingdom.
Research Objectives

 To identify the impact of COVID-19 on small and medium firms within United
Kingdom.
 To examine the decision making that small and medium firms are undertaking during
the COVID- 19 pandemic.
 To identify the ways through which small and medium size firm can survive during
COVID-19 pandemic.
 To determine effectiveness of the UK national schemes in supporting small and
medium firm during COVID-19 pandemic
Research Questions
 What are the impacts of COVID 19 on small and medium firms in United Kingdom?
 What are the decisions taken by small and medium firms during COVID 19
pandemic?
 What are the ways through which SME survived during COVID 19 pandemic?
 What are the effectiveness of UK National Schemes in supporting small and medium
firms during COVID 19 pandemic?
Rationale of the research
The main reason to conduct this research is to know the issues faced by the COVID 19 by
small and medium enterprises. As this pandemic has created a lot of problems to almost all the
businesses but the small and medium firms are mostly affected by this because they have
resources in a very limited numbers. It is done to know the impact of covid 19 on SME in UK
and what all decisions are have taken to cope up with the pandemic. COVID 19 has stopped the
activities of the businesses which has created loss of profits to them.
Overview of the other chapters
There are various chapters that would include as they are necessary to undertake this
research. These chapters help researcher to take research effectively and efficiently because it
explains all the answers to the given questions. It includes introduction in which it gives an
overview of the research and background of the company taken to investigate this research then
it will have literature review in which aims and objectives would be there that explain how
COVID 19 impacted the SME overall and all the ways used by small medium enterprises to
overcome the disadvantages occurred to them.

LITERATURE REVIEW
Literature review is a systematic analysis of books, articles, journals and other sources
that are apt to a particular topic giving a foundation of knowledge on a topic. It is an
identification of the current literature on a topic for the justification of research by revealing gaps
in existing research. It is an investigation which describes, summarises and evaluates the work
that are connected to the problems of the research and it also adds the knowledge of the current
topic, demonstrates how research would be fitted in a large field of study. It does the critical
analysis of the research on a topic and direct all the objectives of the research. The main purpose
of literature review is contribution to understand the problems of research.
Impact of COVID 19 on small and medium enterprises within UK
According to Albonico, Mladenov and Sharma, (2020), novel coronavirus had originated
in Wuhan, China in the month of December in 2019 and spread all over the word. It has a
massive impact on the international trade and had negatively influence all the businesses affected
by it. Many countries had imposed lock down and had loosened confinement periods
depending upon reduction in the cases. As a result, small and medium enterprise were impacted
the most.
The virus has made troublesome for the workers to do their jobs. Almost all people in U.K. fear
for their lives and restrict themselves going out and had isolated them This has led to massive
impact particularly on small businesses.
Although, the U.K government has aided many of the small businessman with the
scheme to reimburse their earning up to 2500 pound. Still,the government had delayed in
fulfilling their promise by stated that this new changes is difficult to adopt and will take some
time to adjust with be able to be successful in implemented the same (Shafi, Liu and Ren, 2020).
As per the research of corporate finance network , 18% of the total small businesses wouldn't be
able to survive in long run. It would take some more time for these U.K businesses to get
normal and be able to cover excessive losses suffered by them.
Decision making that small and medium firms are undertaking during the COVID- 19
pandemic
According to Priyono, Moin and Putri, (2020), small and medium enterprises are giving priority
to the safety and well being of all the employees working there. It is the duty of the firms to give

protection against the pandemic situation and to give safe work area. It is giving support to its
whole workforce so that they do not get unwell. Rowlinson knitwear is also giving safe and
secure place as it is doing time to time sanitisation in the workplace and providing a safer
working environment. It gives support of internal and external resources like sharing updates of
World health organisation, providing transportation for employees who are working till late,
building workforce standards for supporting sick employees and those personnel who are taking
care of covid 19 affected relative person. The medium size enterprise also provides channels of
communication that are effective to track employees and to share information that are critical in
nature, it provides systems of emergency notifications. Rowlinson has also taken decisions of
delivering trainings and practising related to COVID 19 pandemic for the enhancement of
readiness to face and alleviate problems and concerns. As this pandemic has created many
consequences to the areas which made employees living there inaccessible for a longer period.
But on the other hand Rowlinson is taking decision to solve these geographical barriers
by allowing its employees to work from different locations. It is also diversifying the base of
suppliers and third party service givers across geographies so that it can avoid failure points. This
pandemic made people to sit at home to stop the spreading of virus so it increased the activation
of capabilities to work from remote areas. Rowlinson has invested in tools and technology that
helped their employees to do working remotely and collaborating virtually. It has also taken
decisions related to communication because it vital to take out activities and task of a firm. It has
adopted a strategy of robust communication that helped in transmitting transparent information
on time and it also helps to remain constant touch with the stakeholders.
Ways through which SME survived during COVID 19 pandemic
According to Fitriasari, (2020), there are many ways some of them are:
Help from governments: Government of the UK is already taken initiatives to assist small and
medium firms and this assistance is getting better day by day. Government helped by cutting
costs and banks are also aiding by financial assistance with low interest rates. Rowlinson has also
used resources that has given by government and financial institution in this pandemic to get
financial help.
Finding opportunities: This pandemic has also created so many opportunities as it had brought
so many changes in the working of Small and medium enterprises. It has changed the
expectations of customers from firms, it made firms to digitize their products and services.

Rowlinson has also used and implemented technology for balancing loss of earnings by giving
new methods to connect with its customers (Fitriasari, 2020).
Upskilling workforce: The best way to survive in this pandemic is upskilling employees
because if the staff is good then it would support effectively and efficiently in medium and small
enterprises. The staff is trained on skills that are additional in their existing skills. The employees
are provided with trainings that are conducted online which help in making them more
productive. Rowlinson has arranged online courses of digital marketing for their employees to
improve their marketing strategies and it has done easily from home.
Effectiveness of the UK national schemes in supporting small and medium firm during
COVID-19 pandemic
According to the Akpan, Soopramanien and Kwak, (2020), the government of UK has come up
with a number of schemes to cope up with the economic shock arised because of pandemic to
support small and medium sized businesses of UK. Some of them are:
Business interruption loan scheme: It is a scheme that supports small and medium firms that
have turnover of 45 million annually. This scheme gives access to 5 million of funds in term
loans, overdrafts and facilities of asset finance for the time period of 6 years. Funds are delivered
through commercial banks which are backed by British Bank. This scheme has helped SME to
recover from the losses they suffered because of pandemic. It provides loans to those companies
who prove that have been adversely affected by the COVID 19. It gives loan amount up to 25
millions to all those firms which do not have 500 million turnover annually. It has provided aid
to SME by getting financial help through this scheme, it is effective because it helps to recover
from losses that occurred due to COVID 19.
Statutory sick pay rebate: Small and medium enterprises becomes eligible to reclaim SSP paid
for illness absence because of COVID 19. SSP of 2 week to employee who was on off due to
pandemic, employers could reclaim expenses for their employees and maintain records for
employees who were absent and payments related to SSP.
Small business funding: This scheme has supported small businesses that pay no or very little
rates of business because of small businesses or rural rate relief. With this scheme it provides
grant up to 10000 to firms with a value up to 15000 to get a help of meeting business costs. This
scheme helped small businesses to meet their costs of businesses even in the pandemic situation.

State aid: It is the scheme where UK adopted to get the advantages of tax and get grants,
guarantees from state and loan within a period of 24-48 hours. The guarantee scheme cover loan
up to 80% to SME who has turnover of 45 million, so that needs of working and capital needs of
investment can be implemented with British banks. This is the scheme that has measures that
helped the small and medium-sized enterprises during the outbreak of pandemic. And state aid is
the kind of help which is received in a very limited period of time.

RESEARCH METHODOLOGY
Research methodology refers to the process and techniques used for the identification,
selection and analysation of information about a specific topic. It helps reader in evaluating
validity and reliability of a study. Basically methodology provides answers to two important
questions that are: how was data generated? and how was this data analysed?
There are different types of methodologies present for the collection and evaluation of
data. And these methodologies are important to take out this research also as it would help in
gathering information how COVID 19 influenced the small and medium size enterprises (Smith,
2016).
Research approach:
They are the plans and methods for research that provide steps that convert assumptions
that are broad in nature into detailed procedures for data collection, interpretation and analysis. It
is mainly divided into two types: deductive and inductive. Inductive approach, it is the new
theory generation while deductive approach is testing of the existing theory (Kothari, 2017). In
this investigation to find the influence of COVID in working of medium and small enterprises
investigator uses both inductive and deductive methods because inductive helps to find data in a
qualitative manner and deductive helps in finding and collecting data in a quantitative way.
Research philosophy:
Research philosophy refers to the nature and development of knowledge, it basically
defines how data is collected, used and analysed. Including this in research formulates
investigator's assumption and belief. It has two main types: positivism and interpritivism.
Positivism philosophy is a structured method for collection of quantitative manner data in an
effective way (Federighi, 2019). Interpritivism is also an effective process to collect data in a
qualitative manner. For this particular investigation, investigator uses both positivism and
interpritivism so that they can collect and analyse data related to covid 19 influence on small and
medium enterprises.
Research choice:
It is vital for the researcher to choose the best choice to further investigate their research.
There are two types of choice: qualitative and quantitative (McGregor, 2018). In this research
both choice is selected because quantitative helps in collection of data other than numerical
manners whereas quantitative helps in collection of data and information in a numerical way.

Data collection:
It is a process of collection and measurement of correct insights for research using
validated methods. It can be done through two sources: Primary and secondary data. In primary
data, questionnaire is the best because does not take much time and investigator gets data in a
numerical manner. In the secondary data, there are different sources available books, journals,
magazines, articles and many more (VanKooten, 2019). For this research secondary data sources
are used because it is effective for collecting data in a successful manner.
Data analysis :
Data analysis is the process that helps in analysing data systematically. (Bennedsen and
et. al, 2020). For current research thematic analysis is used because it helps in analysing data in a
qualitative style, it helps to form themes that are used in secondary way. It gives emphasis on
identification and interpretation of patterns in a qualitative form.
Discussion
Impact of Covid 19 on start ups was very high, Start up Genome created a survey known
as global start up survey. Following information were gathered through the analysis of global
survey:
Capital: Due to global pandemic 41% start ups were devastated by the crisis, so they were
called in red zone. It was noticed that some start ups lived very few months with cash, 29% were
facing this lack of finance even before the pandemic but during the crisis they got more than
40% shortage of funds in their business. Some small medium enterprises had term sheet before
Covid 19, 20% had term sheet made by investor and 53% had seen the slow process and 28% are
the start ups who had continued their process normally because they had funds secured with
them.
Illustration 1: Runway of start ups

Illustration 2: Firms for raising funds
Illustration 3: Term sheet

Jobs: During the starting stage of pandemic 74% small medium enterprises laid off their
employees who were working there full time. 39% of these businesses terminated 20% of their
workers and even more than that and 60% workers were laid by 26% firms. For the records
biggest three continents start ups share were divided that how many employees were terminated
by them who were working full time in these firms. North America has the large number of
companies who also reduced their employees by 84%, Europe declined it by 67% and Asia
recorded of 59% decline.
Illustration 4: Data about terminated workers

Illustration 5: Changes in cost of labours
Market: At the beginning of pandemic only 74% businesses had seen reduction in their
revenues. Sizeable firms were heavily affected: 16% of them saw reduction in their revenue by
more than 80%. Revenue was majorly affected after the effects of Covid 19 in these firms. It was
analysed that 3 out of every 4 small medium enterprises were highly affected by the pandemic.
Starup Genome data shows that some small companies also experienced growth at the initial
stages of pandemic. 12% firms saw increase in revenue by 10% and 1 out of 10 firms
experienced growth. It was also recorded that business to customer has shown growth in their
industry at the time of crisis than business to business firms.

Illustration 6: Changes in revenue due to COVID 19
Illustration 7: Revenue effect on industries

Management: Many start ups have cut down their expenses from December, 2019. Some firms
have reduced their costs in a large numbers, 1 out of every 10 firms had cut their costs almost by
60%. From these firms 76 percent started their costs in the initial time of March which indicated
that cutting costs were directly connected to the global pandemic. Tech companies were
established during the time of pandemic, other than traditional companies 96 percent start ups
continued their operations even at the time of crisis.
Illustration 8: Cut in expenses
Illustration 9: Data about 3 top continents

Policy: There are 38% businesses which did not receive any assistance and even did not expect
any help from different measures of policy relief whereas 16 percent were expecting help from
those policy measures. The rest 46% start ups were receiving help from these policies. It was
identified by the executives of start ups that there were 4 helpful policy for businesses which are
grants that saved liquidity of companies (29%), instruments for investment boosting (18%),
support for protecting employees (17%) and loan for liquidity (12%).
Illustration 10: Various policies by government
Measures for start ups to save their business from COVID19
Some situations faced by companies during global pandemic are:
 COVID 19 has created sudden demand for necessity products in every country of the
world.
 There was a sudden increase of unemployment in the market of consumers which has
reduced the spending of consumers.
 Spendings of corporates have decreased.
Some solution to overcome the challenges of start ups are:

1. Assisting start ups with the problems of cash flow: Helping those model of businesses
which are good but facing problems to add funds during crisis. Venture capitalists are the
source from which start ups get funds to cope up with the situations like pandemic. They
help by investing to save companies and continue by investing to make them next
winners. There is also a case that every start up can not be faced. Angel investors and
capital ventures put capital in business to save the best start ups.
2. Talent: Talent are the human resource of start ups so it becomes necessary to save them
for organisations. Identification of traditional larger companies that are searching for
talents and matching them with people who laid from other companies. Those start ups
can attract new talents who were unable to attract before pandemic. Subsidizing fresh
graduates recruiting by start ups for ensuring generation of employment. Providing
extension of visa so that they can stay in a country without a job for more than 6 months.
3. Communities: Founders of start ups, talents, investors, experts are the people who build
a very strong community for creating new opportunities and procedures where they can
help each other for a long term. By opening more channels of communication, gathering
leaders of communities of start ups. Pandemic was a great time for taking leadership and
to make Ecosystem steering committee, so they could discussion over issues and their
solutions, offering assistance, identification of new start ups and so on.
4. Demand: Creating shorter demands for start ups and small-medium sized enterprises by
launching government innovation procurement issues. Demands can also be increased
and met by responding to requests of departmental. Providing help to health related areas:
fast provisions of tests, sanitisation and detection of disease or illness. Providing online
platforms to meet the requirement of students, workers and so on. Innovations in the life
sciences, IT, data and many more.
5. Bringing start ups to directly assist with the pandemic: Identification of start ups that
could assist during the time of crisis like health, social services: care of elder people other
than health, delivering foods to the needy people, providing services online: education
and for doing business activities digitally. Introducing these to ministry, city and leaders
of social services for making them heroes.

CONCLUSION AND RECOMMENDATIONS
Conclusion
From the above research it has been concluded that Covid 19 has created a negative
effect on small and medium organisations but for this UK government has come up with the
many scheme to help the firms. These firms also made internal changes to cope up with the
pandemic like trainings for workforce etc. In detail researcher has explained the various areas
affected by the crisis of global pandemic in small-medium enterprises and various start ups. It
also determined the various decisions made these organisations to keep them survived in the
market with different competitors. There are various measures used by UK to protect start ups
from COVID 19 are: Local globe, latitude, accel, seed camp, SVB, dawn, connect, front line and
so on.
Recommendation
From the above mentioned research there are some recommendations that would help
small and medium sized enterprises to overcome COVID 19 situation, the first one is adopting
digital technology in every department and process so that communication can be faster. The
second one is providing proper trainings digitally and face to face, so that employees can get
ready to face any situation in near future. Government has announced $5 million grants to small
medium enterprises for support in the crisis of pandemic. It can be divided for various activities
to be performed digitally. It has also provided funds for trainings and developments. Government
can also come with programmes that can allow instant write off of assets by SME in UK. UK
government can make exemptions of municipal payments for start up and sizeable businesses
and can give period of moratorium on different bank loans.

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Online

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