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Research from O2 Business reveals vast impact of COVID-19 on small businesses
Small businesses have been impacted by COVID-19 six times harder than 2008’s Great Recession according to research from O2 Business and the Centre for Economic Business Research.
The nominal decline in retail sales for small businesses during the Great Recession was approximately 3.9 per cent compared to approximately 24 per cent in between Q2 2019 and Q2 2020, reflecting the impact of lockdown.
The O2 Business report also reveals that for small retailers, 2019 was the most volatile sales year since 2014 as they saw a 32 per cent swing between the high and low month. In 2020, GDP has fallen by a fifth (20.4 per cent) during the peak of lockdown (April-June).
There was some recovery when lockdown rules were eased. GDP by the end of August was still 9.2 per cent below that of February, highlighting high uncertainty for businesses in the UK.
Despite this uncertainty, O2 Business analysis of Companies House data earlier this year revealed almost 200,000 new companies were launched in the first three months of lockdown.
O2 Business has launched the ultimate flexible package, with brand-new tariffs that give customers the control and choice that the plan they sign up for will continue to suit their ever-changing company needs.
The suite of flexible solutions includes automatic data rollover and flexible tariffs so customers can flex their data allowance up and down each billing cycle. As well as this, O2 Business is offering flexible add-on business apps such as Microsoft Office 365, plus a range of business contract lengths, from a rolling 30-day plan, through to three years.
This comes as 71.9 per cent of small businesses cited the pandemic as the most important cause of negative performance in 2020 but this varies between sectors. 36.4 per cent of small businesses in finance indicate coronavirus is one of the most negative factors, compared to 75 per cent in sales, marketing, and media.
The findings revealed by O2 Business show how unnecessary fixed or inflexible business costs can hamper the performance of small companies and hinder their ability to adapt to peaks and troughs in activity throughout the year.
On average inappropriate fixed-term contracts represent 16.2 per cent of monthly business costs, with an average of 35.4 per cent of small businesses agreeing that their phone costs remained the same even when headcount falls.
To address this, O2 Business now offers more flexibility with packages designed specifically to help businesses flex as they evolve.
O2 trading SMB director Maria Fernandez said: “Given small businesses typically have smaller cash reserves for emergencies than larger organisations, the economic shutdown has most definitely impacted them disproportionately.
“This report highlights how critical it can be for businesses to have the ability to adapt as and when their circumstances change.
“We understand that each business is one of a kind and we all know businesses need flexibility, more so than ever in the current climate. With each tailored package, small and medium-sized businesses will be able to have full control over their usage, complete with our new automatic data rollover, ensuring that customers don’t miss out by losing data they’ve already paid for.”
Cebr economist Daryn Park added: “The Covid crisis of 2020 only builds on the volatility and uncertainty themes that have been coming through over recent years.
“Our expectation is that the post-Covid recovery period will require firms and businesses to adopt tools that increase flexibility and resilience in the face of the increasing uncertainty and disruption.”