To get the UK economy back on its feet as soon as possible after the lockdown, the exit strategy must put small businesses first.
While it’s right that decisions are led by public health concerns, for the sake of our important small business population, we need to know – as soon as possible – the Government’s strategy for easing the lockdown conditions.
Why the lockdown exit must be ‘small business first’
Small business owners are the bedrock of the UK economy, contributing around £1.5 trillion every year (37%) to UK private sector turnover. They need to be given hope that the end to this crisis is on the horizon, with a clear strategy to lead them out of the economic crisis.
They need to see light at the end of the tunnel, to give them an incentive to keep going and continue to fund their businesses.
We believe the following three-stage approach would put small businesses in the best possible position to thrive in the future:
1. Prioritise re-opening of small businesses
Small businesses have suffered disproportionately from the lockdown. Three quarters (75%) of small business leaders said they had been negatively impacted by the crisis by the beginning of April. This rises to 80% when looking at the retail sector, and to 90% for the leisure and hospitality sector.
Similarly, a quarter (24%) of small business leaders said they expect their business’s income to be 100% lower in April 2020 compared to April 2019 – this rises to 60% in the hospitality and leisure industry, and 32% in retail.
It’s clear that communities across the world won’t be able to immediately bounce back to how life was before this crisis and that re-opening businesses will be gradual. Allowing small businesses to re-open first, with social distancing measures in place, will give them a necessary head-start, and the opportunity to rebuild before it is too late.
This is a strategy other European countries are taking: Austria allowed ‘non-essential’ small shops to open on 14 April, as did Italy. Other nations taking a similar approach include Belgium, Czech Republic, Denmark and Germany.
2. Change Government support into crisis recovery
The Government has introduced a number of generous financial support programs to help keep small businesses afloat. The trouble is that other than the Job Retention Scheme, they haven’t been delivered on the scale needed.
Instead of radically overhauling these schemes, the Government could invest time in adapting them to support growth when the lockdown has been scaled back.
With small business revenue set to decline by 57% by the end of April 2020, it’s clear that the impact of the coronavirus crisis will be far reaching, making it very difficult for the Government to withdraw schemes such as the Job Retention Scheme and the Coronavirus Business Interruption Loan Scheme any time soon.
To inject optimism and confidence, as well as tangible support, the Government could transform these existing schemes into recovery schemes to help revitalise the UK’s small business community.
The focus in this stage would be on revitalising existing small businesses as well as to support entrepreneurs starting out in business.
As well as tax breaks, start-out grants and loans will help drive a V-shaped recovery.
3. Help UK small businesses thrive in a post-coronavirus world
Post-Brexit and post-COVID-19, the UK will have to operate in a more digital and ecological way.
It’s clear that life might never be the same again and that we need to accept a ‘new normal’, at least for the foreseeable future.
As well as adjusting to the step change of a more digital environment, small businesses will need to adapt their business models to a more ecological and post-Brexit world.
Adapted from a blog by Oliver Prill, Tide Bank CEO