Small business revenue looks set to decline by nearly 60 per cent throughout April, with more than one in three potentially running out of cash in under six weeks.
Worst-hit will be leisure and hospitality businesses where 69 per cent of told researchers they expect their revenue to totally disappear.
The research was released by Tide, the business banking platform which surveyed more than 1,000 leaders of businesses with up to 49 employees to understand the financial health of their businesses.
When asked about their revenue expectations, 80 per cent projected that their revenue will decline with 36 per cent expecting it to drop by more than 90 per cent.
More than 60 per cent of hospitality bosses said they expected to see their revenue decline by 100 per cent, followed by retail, with 38 per cent expecting it to totally disappear. Businesses in IT and Telecoms expect to be least impacted, with just under a quarter saying they don’t expect to see any decline in their revenue compared to April 2019.
If these predictions become reality, Tide has calculated that collective small business revenue (including businesses affected positively and negatively by COVID-19) will decline by around 57 per cent over the course of the month. This builds on a 20 per cent decline already observed on the Tide platform in the last seven days of March.
Considering small businesses contribute around £1.5 trillion per annum (37 per cent) to UK private sector turnover, this is a worrying statistic. This decline would lead to a 21 per cent reduction in UK private sector turnover in April from small businesses alone.
There now needs to be a focus on doing everything possible to get the money into small businesses’ hands as soon as possible
CEO Oliver Prill said: “From the conversations we have had with our 150,000 SME members we knew the situation was very tough, but this data has revealed just how tough it is, and how much harder it is likely to get for small businesses to weather this storm.
“The government’s support for small businesses is highly welcome and needed, and it has the potential to make a huge difference in helping SMEs survive. There now needs to be a focus from the government, and other organisations involved in delivering financial support, to do everything possible to get the money into small businesses’ hands as soon as possible.”
Additionally, the research reveals that 37 per cent of small businesses have cash reserves that will last them six weeks or less without government support. And 19 per cent only have cash reserves that will last up to three weeks.