After a year of lockdowns, layoffs, loss of life, and economic disruption, the COVID-19 pandemic has left few unaffected.
Yet, despite the aggressive vaccination efforts underway worldwide, the pandemic’s end is still somewhat distant. That means more uncertainty for small and medium-sized enterprises across the globe.
In an effort to better understand how small and medium-sized enterprises (SMEs) are coping with the ongoing pandemic and the impact of small business COVID relief, we polled 500 SMEs in the UK, US, Australia, Canada, and New Zealand in early April. Read on to learn what they had to say or click here to view the full infographic.
It’s the question on everyone’s mind: when will this new normal end?
Estimates vary, of course; life appears inching closer to normal in Australia, where the vaccination rollout looks to be completed prior to 2021's end. The picture is perhaps rosiest in New Zealand, where new cases hit an average of one case per day. Meanwhile, the UK is set to reach a landmark 75% vaccination rate by August, while the US government predicts a return to normal by March 2022.
We put this question to our business leaders, asking them when they expect mass vaccinations to impact profits.
The majority—68%—anticipate the tipping point occurring within 2021 while 18% predicted 2022. The remaining 14% responded “never.”
Upon closer inspection, owners of larger businesses tended towards greater optimism. Those staffing between 20 to 100 guessed the third quarter by a 34% margin—only 7% predicted "never." For those with 20 and fewer employees, those answers averaged 26% and 19%, respectively.
Why this discrepancy?
According to Julie Bestry, a Certified Professional Organiser (CPO), and President of Best Results Organising in Chattanooga TN, USA—it’s a combination of big business having more strength to weather financial difficulty and relief efforts that neglected small businesses.
“For a business, my size—which is very small—it didn't particularly help much,” she said. “Many small businesses were frozen. Larger businesses, who took advantage of the PPP, who had opportunities to get loans or to get grants, it helped them.“
According to the International Monetary Fund (IMF), last year’s global financial decline was the worst since the Great Depression. The IMF estimates the global economy shrunk by 4.4%.
An estimated 234,000 SMEs closed in the UK, and 25% say they may close in the next six months. Across the pond in the US, 22.2 million jobs were lost, and businesses suffered a dramatic 52% drop in small business revenue.
Conditions appear better in ANZ, with OECD estimating the Australian economy would rebound from a 3.8% contraction in 2020 to growing 2.5% in 2021. New Zealand again appears best off. Despite entering its first recession in a decade during September, successful containment efforts created a V-shaped recovery, ending 2020 by expanding their economy by 0.4%.
With so many businesses on the brink, we asked our SME owners to estimate the full impact of country-wide vaccination.
Sixty-three per cent expect profits to increase once their country is fully vaccinated, with 27% predicting an increase of between 10 to 20%. Additionally, 17% say they expect a 20% plus increase, and 20% expect an up to 10% improvement.
And again, we see significant variance by company size—27% of organisations with 20 or fewer employees estimated no change in profits. That figure drops to 19% for SMEs with more than 20 employees, the plurality of whom (30%) expect profits to increase 10 to 20%.
Bestry said that vaccination efforts have made a significant impact. While neither have seen a return to normal, Matt Kuppers, CEO and Founder of the Start Up Manufactory, said that he’s getting conference invites for the third and fourth quarter, while Bestry is seeing more activity from previously impacted clients.
“I had somebody send me an email today and say, ‘I saw on Twitter where you posted your vaccination’—I had posted a picture. And she said, ‘I want to talk to you about working with my parents now, because they're vaccinated, and we feel safe now that you're vaccinated.’”
In the UK, Kuppers said he’s beginning to get conference invites for the third and fourth quarter. This is especially promising, as the travel restrictions were among the most damaging aspects of the pandemic, according to Kuppers.
“We are social animals, we want to meet in person,” he said. “You drive business by dining and wining and you know; you get access to people you would normally get access to. This is something you can only do in person.”
Covid's detrimental impacts on the global population's mental health are hard to ignore.
With millions entering periodic, long-term isolation—and experiencing severe financial stress—it would surprise few to learn symptoms of anxiety and depression were found in over 42 percent of those surveyed by the US Census Bureau (a dynamic other surveys indicate is mirrored worldwide).
Our survey of SME owners similarly reported symptoms of severe stress. The vast majority (65%) indicated that they’d suffered sleepless nights.
For Bestry, the isolation had a profound impact on her mental health.
“I made it from March until I had a mammogram in December without actually having the touch of another human being, she said. “And I have to say, it's very debilitating and lonely.”
Poll results show that most of the stress originates from economic uncertainty—nearly 50% said they feared more for their business' future than death due to COVID-19, at 32%.
New Zealanders appeared least afraid—potentially owing to the country’s remarkably low death toll (26). There, only 19% reported fearing death more than their organisation’s future. That figure nearly doubles (32%) in the US, where the death toll has surpassed 500,000. For the UK, that skyrockets to 44%, potentially due to the higher per-capita death rate.
To combat the pandemic's severe fiscal impact, national governments have launched a wide range of small business assistance in the form of economic stimulus packages.
We asked our SMEs to assess their government’s efforts in supporting the business community during this turbulent time.
Overall, owners are broadly supportive of actions taken by their government—just under half (46%) said these efforts helped their businesses survive or grow—compared to 28% who felt that the actions harmed them.
Regionally, SMEs in the UK were far more divided on the small business help they received. Approximately 40% said relief efforts helped them survive and grow; 38% indicated they “hurt my business.” This comes alongside news that UK SMEs are pushing for more aggressive relief efforts. Currently, the UK is pushing for far less per-GDP stimulus spending (3%) than the US (9%).
Despite that, Kuppers lauded the UK’s business relief efforts. He noted their approach to relief was better than Germany’s—where he grew up. When the German government discovered fraud in their relief programs, they shut down relief efforts altogether, which he said hit businesses—especially restaurants—hard. When fraud was discovered in the UK’s relief efforts, the government decided to continue paying out.
“I like the British approach,” he said. “Because it's obviously more rational.”
Bestry, meanwhile, praised the US government for granting unemployment benefits to the self employed. But the country’s focus on big business over individuals and small businesses exacerbated the pandemic’s negative impact.
“I work with solidly middle class people,” she said. “Some were lucky—kept their jobs, and got to work from home—they weren't losing a lot of money. And I had some who lost their jobs. And again, because we don't have a great social safety net in this country, they didn't have—and won't have—the money to come back and be my clientele.”
Much about the Covid-19 pandemic remains uncertain; it’s hard to tell what to expect in the future without a precise expiration date. However, given the precarious financial health of small businesses worldwide, it’s imperative that they can access the necessary financial tools, systems and stimulus programmes to survive.
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