Pulling Together in Uncertain Times

By Edward Thorne, UK Managing Director at Dun & Bradstreet

Coronavirus is having a widespread impact on our economic and social wellbeing as individuals and as businesses. A pandemic of this scale is something that we were largely unprepared for and although some organisations may have had continuity plans in place, many businesses have been thrust into an indefinite period of uncertainty – exacerbated in the UK by the Brexit transition period.

When non-essential businesses were forced to shut up shop when lockdown measures were announced back in March, it marked the start of a challenging period for companies of all sizes. Even where businesses could remain open, customers could only leave their homes to buy necessary supplies and online shopping soared to 33.4% in May 2020, the highest proportion on record.

The latest figures indicate there are 5.82 million small businesses in the UK, making up 99% of the private sector. These businesses are essential to our economy but have been amongst the hardest hit due to limited financial resources. One recent survey suggested that the cost to UK small businesses could be as high as £69 billion.

Businesses did their best to find creative ways to remain profitable during the lockdown. Restaurants were delivering ‘contactless’ food (some via robots) and services such as fitness classes were being offered online while gyms remained closed. But the reality is that although we are passing the worst of lockdown, it’s still a challenging time to be a small enterprise and the next few months will be vital to determining whether a business is able to survive the crisis or face permanent closure.

A helping hand

It’s in everyone’s interest to help small businesses weather the storm and the government’s suite of measures have provided support for many with over a million bounce back loans worth over £30 billion approved for small businesses, alongside more via other loans schemes and the Future Fund.

Over £330 billion has been made available to date in government-backed loans, to provide financial support to businesses in addition to the job retentions scheme and different initiatives such as the kick-starting tourism scheme and new initiatives being announced on an ongoing basis.

But it’s not just the government supporting small businesses. We’re also seeing businesses supporting each other. Early on in lockdown, Morrisons pledged to pay their suppliers immediately to mitigate the impacts of COVID-19 on supply chains. As our data and analysis shows, prompt payment is vital for enabling smaller organisations to run smoothly and is hugely important to small businesses.

Business leaders have been uniting to do all they can to fight the virus. Be it through fundraising, donations, manufacturing of ventilators or other equipment and supplies – many businesses have really stepped up to the plate. We have also seen businesses give back on a more human level. For instance, supermarkets opening early exclusively for the elderly or vulnerable and discounts and donations to NHS and other key workers are just some of the initiatives created by businesses to help those in need during lockdown.

After all, it’s those small gestures which are so important. Examples include SME owners encouraging customers to shop at other small businesses to help them survive. There have been instances of a real ‘blitz spirit’ over the last few months within the business community, as well as the wider community, pulling together to help.

On the horizon

Despite some positive signs and green shoots of growth in the UK’s GDP figures for May, Dun & Bradstreet’s latest analysis  predicts that the UK economy will contract by 8.5% in 2020. This is especially significant to SMEs who generate 51% of all UK business turnover and will need the most support on the road to recovery.

It’s likely that the economic recovery will be modest and gradual across the majority of sectors and our Country Risk team are maintaining a ‘deteriorating’ risk outlook with our rating for the UK remaining at an all-time low.

Our data has shown a worrying trend for worsening payment performance and the number of late payments is expected to increase in future quarters as the full impact of the economic contraction caused by the pandemic becomes clearer. When we surveyed UK SMEs prior to the outbreak towards the end of last year, we found SMEs were owed an average of nearly £75,000 at any one time in the last 12 months in late payments and over a third (34%) said timeliness of payments from customers had an impact on their future financial success which cannot continue as we try to rebuild our economy.

Edward Thorne

As social distancing measures are likely to stay in place for the foreseeable future and potential local lockdowns may be instigated, SMEs face further disruption and uncertainty as the end of the Brexit transition period approaches in December 2020. Analysing the data available will be key to assessing risk and establishing the right business continuity planning.

In it together

Like many other businesses, when the pandemic escalated, Dun & Bradstreet looked at how we could do more to support others and how our data and analytics can help.

Our data scientists have been working closely with government agencies to provide access to information on businesses, including size, location and industry type etc. to help inform and target support efforts.

We also offered free data and solutions to help businesses assess the impact of the pandemic on their supply chain or customer base. This includes ‘health scans’ and free access to credit data on their own business and others, information on customers and prospects, a disruption tracker and an COVID-19 Impact Index.

For a small business with tight cashflow and few reserves, knowing if a customer is going to pay on time, or whether they are likely to be accepted for a much-needed loan can be vitally important to planning and survival.

Data can also provide useful insight on the changing needs of customers, as well as identifying any new opportunities or prospects that may arise from this unprecedented situation.

Although the impact of COVID-19 will lessen as business returns to some sense of normality, the way we do business and act as consumers is likely to have changed significantly. From increased home working to accelerated digitisation, enterprises are facing an irrevocably different environment as they work hard to re-start their businesses and survive the COVID-19 recession. We all have a part to play as businesses and as individual consumers to support our small businesses through these tough times and help to kick start the economy again.

Ultimately, while isolation and the lockdown has helped prevent the spread of COVID-19, working together is what will enable us to rebuild Britain’s small business ecosystem – and help our wider society continue to thrive in a post-COVID world.