SME Survey

What impact does the current climate have on the turnover and profit for small businesses?

Just before lockdown, a survey was undertaken of small business owners asking for information about their historic performance and the future outlook – at the time only Brexit was upon us.

Six months later, a similar survey was undertaken to explore what impact the pandemic had in the results. As the survey was anonymous, it was not possible to go back to exactly the same people who responded first time around. However the same demographic was approached.

Here is a summary of the findings. In the initial survey, 77.9% of those surveyed (68 respondents) expected their business to grow over the next 12 months. This is encouraging given that it was just Brexit was looming on the horizon at that time.

For the latter survey (47 respondents - see Figure 2), this dropped to 51.1%. However, 25.5% expected their turnover to stay the same (22.1% in the original survey), 14.9% were unsure and 8.5% thought their business would shrink.

So this isn’t too drastic in outcome given the impact of Covid-19 and the unknown outcome of Brexit; with less than 1 in 10 small business expecting a drop on turnover.

A supplemental question, not asked in the first survey, asked about the impact on profit over the next 12 months. The results of this survey were 61.7% indicated that they expected profits to grow, 14.9% to stay the same, 10.6% were unsure and 12.8% thought their profits would shrink.

Once again, this is not too bad – 76.6% of businesses not being impacted by a profit loss. As all businesses should focus on bottom line profits, this is encouraging given all the uncertainty ahead. Even more interesting, combining the surveys that considered turnover performance over last 12 months, the outcome is shown below:

Shrink 21.7%

Unsure 5.2%

Grow 54%

Same 19.1%

Turnover performance last 12 months (115 respondents)

This implies, comparing this data from the results of the two surveys, that surprisingly less businesses are expected to shrink over the next 12 months than did in the previous year. One in five shrank historically, but only one in eight are expecting to going forward. And a similar percentage to the most recent survey (73.1% versus 76.6%), around three out of four businesses either growing their profit or staying the same.

Whilst not a statistician and no doubt holes can be found in the analysis, it is clear that the current situation facing small business has had an impact, it seems there is still light at the end of the tunnel. The next hurdle to face is a recession, however small businesses are in the best position to adapt to meet the challenges ahead. SMEs (small and medium-sized enterprises) account for 99.9% of the business population (5.9 million businesses) in the UK. Of that number, 4.5 million are businesses with no employees (source: ONS). This is a significant contribution to UK plc, so going forward, it is the small business owner that can make a difference to the economy going forward. Onwards and upwards.

Get involved

To take part in the next survey – What marketing channels work for you? – visit here: https://forms.gle/ kqUrVJDMdUjY5gJc8. The results will be shared in the next edition of this magazine.