One in two small and medium-sized businesses (SMBs) do not think the latest government guidance will be significant in helping to boost sales, according to Sage.
The findings are taken from the eighth edition of Sage’s SMB Tracker – which highlights the latest sentiment from the UK’s SMBs in the wake of the COVID-19 outbreak.
The tracker highlights the ongoing financial pressures still facing UK SMBs and their preferred options for further support. 44% still expect to be making less than half their usual level of sales after its implementation. 25% expect to be facing a sustained decline of more than 75%.
Although there is broad support for Government action among the SMB community – 65% of whom support the shift in messaging and new ‘Stay Alert’ slogan – there is clear concern about the longer-term effects of the lockdown on demand.
17% say that actions to stimulate consumer demand would be the most important factor to get them through the coming months.
Outside of the existing Government support measures, the most popular option among SMBs for further support is a cut in VAT; 44% say this would benefit them.
However, the majority of these believe that a significant cut – to 10% or less – would be required to help their business resume operations or increase sales.
SMBs say the extension of the furlough scheme will be the most important measure to help them get through the coming months (44%). 46% of businesses wanted the scheme to continue in a more flexible form and 36% wanted it to continue in its current form.
25% say the extension of support for the self-employed will be the most important measure to help them through the coming months.
Appetite for government-backed loans continues to increase – 39% of SMBs now intend to apply for either bounce back or CBIL loans, an increase from the 20% who said they would “consider applying” four weeks ago. 28% are planning to turn to commercial lenders for loans or overdraft extensions.
28% of SMBs have shifted to conduct business online in direct response to the pandemic. 31% were selling and serving customers online before the crisis, meaning that ecommerce activity has almost doubled.
55% believe that the rate of relaxing lockdown restrictions should be allowed to vary by region, or devolved nation, according to infection rates.
“The government’s new guidance and extension of the furlough scheme has provided valuable direction and support to the SMB community this week and will go a long way to relieving the critical pressures they are facing,” said Sabby Gill, Managing Director of UK&I at Sage.
“But as businesses wrestle with the realities of resuming operations in a socially-distanced world, many are still expecting sales to remain at critically low levels into the summer and will struggle to pay full-time salaries for returning workers.
“The extended furlough scheme does not allow for businesses to bring workers back part-time before August; and this lack of flexibility could risk holding back progress and recovery.
“We must also recognise the very real concerns around demand. 20% of SMBs say actions to stimulate consumer demand will be the most important factor to get them through the coming months. Any steps to boost confidence and spending would provide a shot in the arm to the entrepreneurs across the country looking to rebuild.
“However, we are also seeing truly remarkable levels of innovation and digital transformation. One of our key findings this week is a wholesale shift towards ecommerce – over a quarter of SMBs have started conducting business online as a result of the pandemic.
“We should applaud this agility; and look closely at the opportunities that digital technologies can offer to access new markets, enhance productivity and drive growth.”