A Study on the Impact of COVID-19 on UK Small and Medium Enterprises

This report examines the impact of the COVID-19 pandemic on small and medium-sized enterprises (SMEs) in the UK, focusing on Davison Canners as a case study. It explores the role of SMEs in the UK economy, the challenges they face due to the pandemic, and the strategies they employ to mitigate negative impacts. The research utilizes secondary data to analyze the economic effects, including financial difficulties, supply chain disruptions, and changes in consumer behavior. The report identifies key challenges such as reduced customer demand, access to capital, and the need for technological adaptation. It also highlights measures such as government support, financial planning, staff upskilling, and resilience strategies. The methodology involves a literature review and analysis of the challenges and measures used to cope with the pandemic. The findings provide insights into the resilience of SMEs and offer recommendations for navigating the ongoing economic challenges.

Business research
project
1

Table of Contents
Introduction......................................................................................................................................3
LITERATURE REVIEW................................................................................................................4
METHODOLOGY..........................................................................................................................8
Research methodology.....................................................................................................................8
Research & findings.......................................................................................................................10
CONCLUSION AND RECOMMENDATIONS..........................................................................14
Conclusion.....................................................................................................................................15
REFERENCES..............................................................................................................................16
2

Introduction
COVID 19 pandemic has affected different industries in different manner. But small and
medium business has been hardest hit in this situation. For this small business have to form
suitable measures so that overall negative impact can be managed and reduced to some extent for
this there are several strategies that are being formulated in the report (McPherson, Rees and
Wendler, 2018). Present report is based on analysis of Davison Canners that is dealing in growth
as part of sustainable business. It is a food production brand includes various products in their
food range. It is a medium sized UK based organization having a workforce of about 50 to 250
employees. Presently there is analysis of the way different situations of covid 19 pandemic has
affected the functioning of small and medium enterprises across UK. Presently report is based on
analysis of the different challenges that are faced by such small and medium enterprise because
of this COVID 19 situation. Further there are some strategies that have been formulated in order
to deal with this situation of covid 19 pandemic for small and medium business.
Aim:
“To examine the impact of COVID-19 on small and medium size enterprises”. A study on
Davison canners UK based SME.
Objectives:
 To articulate the role of small and medium size in UK economy.
 To evaluate the impact of COVID-19 on small and medium size organizations in United
Kingdom.
 To determine the challenges faced by small and medium size firms due to COVID-19
pandemic.
 To identify the measures used by small and medium firms to overcome from COVID-19
pandemic.
Questions
 What is the major role of small and medium size in UK economy?
 What is the overall impact of COVID-19 on small and medium size organizations in
United Kingdom?
 What are some of the challenges faced by small and medium size firms due to COVID-19
pandemic?
3

 Develop some measures used by small and medium firms to overcome from COVID-19
pandemic?
LITERATURE REVIEW
Role of small and medium size in UK economy
As per view point of Ahi and Piantoni, (2017), Small and medium enterprises are very
important for economy of a country. It is ranging from local shops to various small tech firms
that are part of services offices. Majority of organisations across UK are small and medium
enterprises. In year 2018 the parliament has identified that there are 5.7 million SME who are
making up to 99 percent of the business across whole country. Further there have been 5.4
million micro businesses that is accounting for 96 percent of total business across UK. Across
UK SME are defined as the independent business that is having a number of total workforces
that is less than 250 employees (Leake, 2019). They possess an annual turnover of less than 40
million pounds and the annual balance sheet does not exceed 34 million pounds. There are two
major types of business that are part of the small scale sector. First includes the household
industries and the traditional cottages that is part of the semi urban or rural areas and is part of
part time employment of people. Another includes the moderns SME that are the innovative
technology business. It is coming up with some creative solutions to older concepts so that there
can be introduction of new concepts as a way of doing things.
Small and medium enterprises are the backbone of a healthy economy as it is deriving overall
growth, offering employment opportunities and opening up of new markets. As per study
conducted by Santander SME are making a contribution of about 51 percent that is a turnover
generated in the private sector in year 2018 (Le Roux, 2017).
SME organisations across UK are helpful in generation of many employment opportunities.
They are working towards creation of semi skilled and skilled workers for the objective of
supporting the future industrial and business expansion across country. The stability in UK is
relying on low employment rates; SME is employing approximately 16.3 million of people and
contributing of 60 percent jobs across UK. It also reported that SME has been able to create a 2
million job scenario in time period of last five years. SME are generating competition and
further encouraging the process of innovation across range of industries.
4

SME are generating competition and also encouraging the innovation across various industries.,
it is providing economy with a healthy supply of ideas and skills to make the market place highly
dynamic for various start-ups it is very necessary to posses the competitive sprit in order to
service in the fast changing environment (Cacchione, 2016). SME are able to respond and adapt
quickly to the changes that are taking place across economy. The SME organisations re generally
more customer oriented are willing to understand the customer needs based on small business
and local communities.
Presently SME are accounting for 99.5 percent of business that is part of major industry sector.
SME are recognised as vital for economy as it helps in enhancing the productivity of an
organisation that has fallen in recent years. There is need for more support to small business.
Evaluate the impact of COVID-19 on small and medium size organizations in United
Kingdom
As per Dimson (2020), there have been many survey conducted by McKinsey in year
2020 in movement. It suggests that glimmers o hope for UK can be from small and medium
enterprises in early situations. But in the present scenario of covid outbreak SME have been
struggling a lot in surviving this situation of fast changing external environment, the major
reason have been the restrictions that are imposed during this pandemic (Hillary, 2017). 52
percent of 653 SME have been surveyed and it was find out that these can be out of the business
in coming time period of 12 months or may be less than that because of the present trading
conditions across different parts of the world.
SME accounts for 50 total revenue generated by the business across UK and 44 percent of the
labour force, the figure has been improvement of results that was the survey conducted in the
months of may and august 2020 where it was ranging at 57 percent & 60 percent of the
respondents respectively. With the improving of trend the revenue reported that in UK SEM
represent have been stronger in November 2020 as reported those in previous surveys.
Large number of the respondents from this survey had a view that they require huge financial
support from the government in this situation in order to survive. The lockdown situations have
resulted into a complete downfall in the sales and revue structure of these SME. Further people
have lost their jobs and no profitability on their business is resulting into reduction in their
overall purchasing power (Anning-Dorson, 2018). This is going to lead towards a shift of more
necessity products. In case of fashion brands like Davison canners it has become more difficult
5

to maintain their present base of customers as there is no motivation for people to have
preferences towards luxurious eating habits in this pandemic situation. They are just willing to
fulfil their basic and essential commodity requirements. So SME brands like Davison canners are
experiencing a clear down fall of sales in the year 2020 because of this outbreak of COIVID
virus (Coronavirus (COVID-19): SME policy responses, 2020).
The challenges faced by small and medium size firms due to COVID-19 pandemic
As per thukral E., COVID 19 pandemic is leading to lot of chaos across different parts of
the world. The different economic elements are interrelated with various public health measures
that are resulting into large amount of economic instability that is focussing on creating a change
in the market dynamics (Baum and Hai, 2020). For SME the customers are already very pricing
sensitive and the availability, convenience and desire to support the local business is related with
top drivers behind purchasing decisions of customers. This has resulted into lifestyle and culture
challenges because of business facing increasing challenges.
There for SME business have hardest hit by COVID 19 virus because various sectors likely food
services, retail, hospitality, construction activities and restaurants services are overrepresented by
SMEs. When it is running of small business in the hospitality sector or operation of a small
accounting firm there is need of a right technology and processes for dealing with financial
imposition (Prange and Pinho, 2017). It is coupled with reduced customer demands. Some of the
biggest challenges that are faced by such business is related to access to capital. In case of small
business like before there are issues of maintain the overall supply chain lines as employees are
not able to work remotely and balance overall situation in 3 out of 5 business that are surveyed
they are struggling with aspect of managing of fiancés. The major expense for small business
includes paying of bills that accounts for 28 percent and salaries and wages of workers that
accounts for 29 percent.
In case of fashion retail brands like Davison canners there is emphasis on to adapt the changes by
timing on to various internet tools. As per facebook surveys mark zuckerberg is making
conclusions that the new e commerce gestures will be allowing various small business to build
up their online stores on both Instagram and facebook platforms (Rodríguez-Pose, 2018).
Medium business like Davison canners can use strategy of being more resilient and optimistic so
that they are able to deal with situation of covid 19 pandemic. Majority of business have reported
6

that they can be optimistic about the future by having focus on alternative ways that can help in
dealing with this situation of COVID 19 virus.
To identify the measures used by small and medium firms to overcome from COVID-19
pandemic.
As per bhatti (2020), the present situation of COVID 19 virus is affecting various business. So
there is needed to focus on tapping in resources that are offered by financial institutions and
government. Government across different parts of the world have to manage their cost so that
they are able to explore various options that can help them in exploring various options in the
market. In fashion retail brands like Davison canners the organisation can prepare a three moth
financial plan where the expenses may include office rent, employee salaries and utility bills
(Akpan, Udoh and Adebisi, 2020).
There is need to finding and development of opportunities by working towards capitalising of
events. Small and medium business can work towards up skilling of staff by as many
government initiatives are working towards having an e course digital marketing strategy for
small business that is a great way to learn about various digital marketing strategies and further
implement into business (James and Pattison, 2021). Resilience is an important concept that has
to be used for dealing with the entrepreneurial crises as management as to aid in understand of
the way business can deal with changes; resilience will help in dealing with business problem
and availing of opportunities.
Another challenge with small business is to employees facing difficult economic circumstances
that have to be managed (Fairlie, 2020). As many organisations have to pay cut from their staff
salaries. As per report 3 percent of business has reported that employee headcount actually
increase and 44 percent said that there has been reduction in number of workers and employees.
It is necessary
METHODOLOGY
Research methodology
Research methodology is defined as process through which data is collected related to the
subject. The main aim of research methodology is linked with executing reliable data which is
7

authentic to the investigator. In the present research study secondary data has been taken into
consideration as it helps in collecting facts & figure from different sources such as books,
magazine, published articles etc. The main advantage of using secondary source of data is that it
helps in finding out relevant fact by executing in depth study of the subject, as the data is already
present in books, articles thus it helps in saving both cost and time of researcher in conducting
their research study. Apart from these all these factors are also determined as the major benefits
of conducting secondary study of philosophy so that aims & objective can be achieved in the
desired time frame (Cacchione, 2016). It is determined as a procedure in which information is
gathered connected to specific research. The primal aim of research methodology is related with
implementing reliable information that is determined as authentic to investigator.
Research onion is defined as the phase which is linked with making possible improvements in
the research study (Rodríguez-Pose and et. al 2018). The main layers which are being used in the
research are the process involved in conducting the study. Various layers in the research onion
are evaluated below as:
Research philosophy
This term is linked with knowledge factor in order to make significant improvements during
the desired time frame. The philosophy of interpretivism is used by the researcher mainly
dependent on the principles in which specific role is performed in analyzing the social world.
The main objective behind choosing interpretivism philosophy is helps in analyzing the problem
from the real life. This method is mainly dependent on qualitative research method and mainly
focused through offering data which is meaningful and authenticate related to the talent strategy
for motivating employees at the work place in order to achieve set business goals.
Research approach
It is related to overall decision which signifies approach that is used in respect of specific
subject area. There are two kinds of approach named as inductive & deductive. Inductive
approach assists in providing favourable outcome connected to research in respect of aspect of
talent administration and deductive approach is helpful in providing article & information in
respect of talent management in proper way. But in this research, the reason choosing deductive
research because it define preposition related to hypothesis and focuses on providing favourable
8

outcome connected to research in respect of aspect that is connected to talent management
(McPherson, Reese and Wendler, 2018).
Research strategy
The survey is adopted in research strategy. The primal advantage of using survey is that it
is helpful in saving time and able to provide more and more information in context of specific
area of subject. It is useful in providing description regarding characteristics of overpopulation
and offer accurate sample for organising targeted outcome through which favourable or positive
conclusion is accomplished.
Research choices
There are two kinds of choices of research such as quantitative and qualitative. It is significant
for researcher to use proper research choice for accomplishing better outcome in future period of
time. The qualitative research is a research that is helpful in providing accurate factor in respect
of strategic planning as well as its management (Ormazabal and et. Al, 2018). The qualitative
method is used for providing explanation regarding information in respect of talent management
because it helps in assessing perspective related to chosen subject area. In this research, the
reason for selecting qualitative research is that it provides detailed information which will be
helpful in taking decisions in respect of theoretical perspective that is related to selected subject
area.
Data Collection method
It is related with collecting primary as well as secondary data. In primary method,
information is collected which is fresh or collected for first time. There are various kinds of
sources that aids assistance in organising or gathering primary information is survey, interview
and so on. In assistance of this, the secondary data is adopted for gathering information which is
already collected by any other investigator like internet, books, articles and so on. In this
research, the secondary data is collected because it is helpful in providing accurate information
that aids assistance in accomplishing goal and objective in pre-decided period of time (Leake,
2019).
Data analysis
In order to analyse collected data by adopting secondary method is determined as helpful.
For the purpose of analysing the present secondary data there is use of thematic analysis
technique. Secondary data is used because it is mainly used within literature review that aids
9

assistance in analysing viewpoint of author which is helpful in accomplishing objective in timely
manner (Le Roux, 2017).
Ethical consideration
It is evaluated as the most vital research method that are mainly used by the research person
in order to enhance understanding & value related to subject study in effective manner.
Therefore, the research person does not find appropriate to take data from the responded and it
offer facility to them within the particular field of study. In relevance to this, the main
responsibility of the investigator is linked with achieving the target in the desired time frame
with the appropriate legal standard for executing business enquiry. In accordance with this by
collecting data from the interview helps the researcher for achieving their target in the desired
time frame for achieve success in their study. For conducting specific research, the researcher
mainly focuses on conducting research study on the basis of ethical standards. The value mainly
consists of trust, equality, truthfulness etc. The primary aim of the ethical research is that
research should adopt for authenticity of data. In addition to this the researcher mainly performs
their working in desired manner so that all business task in the desired time frame.
Research & findings
What is the major role of small and medium size in UK economy?
10

(Source: 6 Small Business Challenges During COVID-19 (+ How to Overcome Them), 2020)
(Source: 6 Small Business Challenges During COVID-19 (+ How to Overcome Them), 2020)
As per various surveys approx half of the business have reported that the major interactions
between customers and clients have to be conducted on physical locations and these business
cannot go completely online. For this such SME have to make arrangement for creative ways to
succeed during this COVID 19 situation by expanding into new markets and development of
innovative ways for delivering of the products or services.
11

Small and medium enterprises have supported and are backbone of a healthy economy. They are
driving the growth providing employment opportunities and opening up of new markets. The
changing time there is more focussed working towards creation of a skilled and semi skilled
workforce to support the future Business expansion. The stability of UK economy relies on the
overall low unemployment rates. Customer spending is another factor that affects the economic
growth and overall gross domestic product of a country that is associated with development of
small and medium enterprises. They are handling around 16.3 million people and also
contributing to 60% of the jobs across United Kingdom (What Are SMEs & Why Are They So
Important for the UK Economy?, 2019).
What is the overall impact of COVID-19 on small and medium size organizations in United
Kingdom?
It has been founded that there is some of the basic impact of coronavirus on small and medium
enterprises such as there is crash of their transmission channels. On the supplies site
organisations are experiencing a reduction in the supply of labours as workers are not well or
they have to look after their family. In demand side there has been a dramatic and certain law of
revenue and demand for small and business enterprises because of severe liquidity shortages.
Customers are also experiencing loss of income there is highest uncertainty which is leading
towards reduction in consumption and spending. Some of the sectors like transportation and
tourism are also affected that is leading to reduction in business and customer confidence. Small
and business enterprises have been affected in a drastic manner because of less flexibility and
resilience in dealing with the cost.
The overall impact of covid-19 virus on assembly industries is that as per the survey and above
mentioned graph it is clear that the numbers indicate many organisations will not be able to repay
their loans and leases. Approx 15% of organisations will not be able to pay lease and 18% will
not be able to pay their loans. The respondents from the survey said that by November 2020
there has been a layoff of 23% of the staff as compared to 18% in August and May. 55% of
respondents had an optimistic view related to economic conditions may improve when the covid-
19 pandemic is over. But such optimism is related to progress because there is production of
vaccines that may affect the situation (UK small and medium-size enterprises: Impact of the
COVID-19 crisis, 2021).
12