SMEs are in a state of paralysis and feel unable to plan their financial future, according to a survey by ACCA UK and the Corporate Finance Network (CFN).
An overwhelming 77.8% of accountants’ small business clients do not expect to return to pre-Covid levels of production and turnover for at least a year, raising questions about their confidence and willingness to invest.
According to Claire Bennison, head of ACCA UK, a lack of clarity in government messaging and the slow roll-out of some support schemes are to blame. ‘The unintended consequence of this uncertainty is to leave small businesses lacking confidence in their ability to secure the financing necessary to get back up to speed as quickly as possible,’ she says.
While the 12 April end of lockdown for non-essential retail has allowed the reopening of some small enterprises, such as pubs and cafes, for outdoor service, 33% of respondents said that early trade had been lower or much lower than expected; only 22% said it met their expectations.
Despite the worrying increase in the so-called Indian variant of Covid-19 in the UK, the survey also reveals that little more than a quarter (26.8%) of small businesses have made plans for surviving another lockdown.
As for the longer-term outlook, only 16% of micro businesses have made permanent changes to their business strategy in the light of the global pandemic, despite the health crisis posing fundamental threats to some sectors.
CFN founder Kirsty McGregor says: ‘The temptation is for small business owners to remain cautious and delay investment, which will only postpone a return to normal trading. There will inevitably be insolvencies in the coming months, but some of those will be avoidable if owners are able to examine whether their business strategy is still suitable for a post-Covid world.’
The findings come from an ACCA UK and CFN survey of accountants representing 10,839 SME clients between 12 and 19 May.
