How the accounting profession can support SMEs through Covid-19 and beyond
Our objective was to provide insight into how Covid-19 restrictions were affecting businesses, what action they were taking and how they were being supported (or not) by their key business service providers. The output also identifies a roadmap for service providers to support these vital SME businesses better going forward.
Loss of custom has hit SMEs hard. On average, monthly revenues dropped by 44% since lock-down measures were introduced. Micro businesses have been especially badly hit.
Working from home and staff furlough schemes were the most widely considered and implemented actions. At the time of asking consideration of key SME government loan schemes, either Business Interruption or Bounce-back, was much lower than other options potentially indicating a reluctance to take on debt in uncertain times.
On average half of those who considered actions followed them through to implementation.
Four out of five SMEs are confident their business will survive post Covid-19 restrictions, but most accept it will take some time to get back to where they were. A third think that it will take more than a year and 1% fear that their business will never get back to pre-crisis levels.
Q: How confident do you feel that your business will survive post Covid-19 restrictions? Base: All SMEs n = 1000
Q: How long do you estimate that it will take your business to return to pre-crisis levels? Base: All SMEs n = 1000
When asked for the one piece of advice they would share with other businesses like theirs, a third advocate a positive mindset, being patient or hanging in there.
Clearly not all businesses are going to ask for help.
Accountants and banks have consistently provided the best support and have been most proactive in helping with cost cutting and cashflow measures.
Q: How would you describe the level of support you have received from each of the following since the start of Covid-19 restrictions?
Q: Which of your business service providers have proactively helped you with cost cutting / cashflow measures to help your business survive in response to Covid-19? Base: All SMEs with that type of supplier n = 501-829
Those service providers who proactively helped SMEs with cost cutting / cashflow measures were over five times more likely to see their brand perceptions improve due to their response during the crisis. Similarly, those providers who personalized their communications rather than providing generic ‘one size fits all’ messaging were three times more likely to see their brand perceptions improve than get worse.
Proactively suggesting cost cutting / cashflow measures
Proactive suggestions and recommendations to boost or mange cashflow are accountants’ key strengths. One area where accountants have delivered strong content is in self-service Covid-19 hubs. There is scope to increase the reach of this kind of support particularly as other service providers, such as banks, would seem to have less credibility here.
How should you, as accountants, be helping SME’s as lock-down measuresare slowly lifted and Britain cautiously begins to re-open for business?
Make sure you really know the situation facing all your clients. We know that small business operators are resilient but the “sit tight and hang on” approach of many cannot be considered a viable strategy. It is time for accountants to ask searching questions, listen hard and even to dispense some tough love.
Help provide the immediate “roadmap” to exit Coronavirus measures. This could include advice on areas such as short-term planning to fund impending furlough tapering, budget forecasting for planned redundancy, and revisions to business plans for reduced capacity due to social distancing measures.
SMEs will need solutions and support for the long term. Surviving the next few months is one thing, rebuilding for longer term success in a ‘new normal’ is another. This will involve building financial resilience and contingency plans for dealing with a potential second wave.
Tailor responses to individual business circumstances and to differing sector needs. Small manufacturers, for example, will be able to manage the social distancing of their workforce in the factory more effectively than those in the hospitality and construction sectors. Accountants can help to advise on appropriate funding solutions for investment in new equipment such as screens and new systems or contactless payment, as well as providing guidance on updating and simulating alternative business break even models.
Finally, if you have heard nothing from your SME clients do not assume that all is well. Pick up the phone. Larger, higher revenue, SMEs may naturally be the focus of your attention but they will have more in house resources to fall back on, so don’t forget the micro businesses where better management of cashflow and debt can make a vital difference to their future.
1000 interviews were conducted between the 19th and 26th May 2020 c. 9 weeks after lock-downRespondents were all Owners, Directors, Partners or Managers of SMEs (businesses with fewer than 250 staff).
The sample was based on the turnover split between micro businesses (fewer than 10 staff including solus), small businesses (10-49 staff) and medium businesses (50-249 staff)
Interviewing was conducted online using a panel.
The sample was representative of industry sectors and geography.
We asked about six types of suppliers which these businesses may use – banks, accountants, landlords, enterprise software, payment providers and communications providers
Biznography Limited, market researchers for business.