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BUSINESS REVIEW SEPTEMBER 2020

BUSINESSES STILL VULNERABLE

Research conducted by the British Chambers of Commerce (BCC) suggests a significant proportion of firms remain ‘vulnerable’ as government support schemes wind down.

Data from the latest BCC Coronavirus Business Impact Tracker revealed only a modest improvement in trading conditions. For instance, while the number of firms reporting a rise in revenue from UK customers did increase to 38%, up from 34% in the previous survey, a similar proportion reported a drop in revenues.

The research also found that many firms are still highly reliant on government coronavirus support to ‘help stem cashflow issues’. In addition, the precarious financial position of many businesses was vividly highlighted, with almost four in ten respondents saying they have three months or less worth of cash in reserve.

BCC Director General Dr Adam Marshall commented: “While some firms are seeing improvements in trading conditions, we are still very much in the eye of the storm, with further turbulence ahead. As the government’s emergency measures begin to wind down over the coming weeks, and with the prospect of further local lockdowns still very real, businesses across the UK are going to need further support to weather uncertainty over the coming months.”

BACK TO WORK?

Business groups have cautiously welcomed government efforts to encourage employees back to work amid fears over the impact remote working is having on local economies.

In recent weeks, concerns have been expressed about the effect of an extended period of remote working will have on city centres. CBI Director-General Dame Carolyn Fairbairn, for instance, warned of cities becoming ‘ghost towns’, adding that a return to work was vital for reviving the economy.

The government has begun promoting ways to make workplaces COVID-secure so that more people feel comfortable returning to the office, although fears have been raised over the impact such a move might have on the R rated. Business leaders have also called for greater guidance and the introduction of government incentives to help firms with the cost of making premises COVID-secure.

Members of the business community have also stressed that the final decision must rest with the companies and staff themselves. Institute of Director’s chief economist Tej Parikh commented: “It’s right for the government to encourage and enable those who want to return. However, the decision ultimately rests with individual firms and staff, many of whom have found remote working much more suitable than expected.”

SMEs BEAT PROFIT EXPECTATIONS

Data from Barclaycard Payments’ quarterly SME Barometer found that UK small businesses exceeded their second-quarter revenue expectations and are cautiously optimistic about future prospects.

At the beginning of April, respondents to the survey predicted they would suffer an average revenue decline of 28% during the second quarter due to the coronavirus pandemic. However, the actual impact was found to be less severe, with the latest research revealing an average loss of 14%, exactly half the anticipated level.

The Barometer also suggests businesses are generally feeling more positive about the future. The survey’s optimism index, for example, jumped from a score of 79 out of a possible 200 points at the start of the previous quarter, to 95 points in the current quarter. Additionally, 36% of SMEs reported a positive outlook for their own business, up from 21% previously.

Unsurprisingly, the pandemic was still found to be causing considerable disruption, with 60% of SMEs expecting it to have a significant impact until at least the end of September. Despite the ongoing uncertainty, a degree of cautious optimism shone through the survey with respondents predicting average third-quarter revenue growth of 5%, rising to 14% over the next 12 months.

FREELANCE PRODUCTIVITY BOOST

New research suggests that employing skilled freelancers typically boosts business performance and also increases opportunities for job creation.

According to a survey of 1,028 UK-based SMEs conducted by Trinity Business School, when freelancers make up at least 11% of a company’s workforce, productivity levels typically rise. Specifically, the findings showed that average productivity at such firms was £4,669 higher per employee than those with less than 11% freelancers working for them.

Further analysis of the data also found that when companies used freelancers as an addition to their existing workforce rather than a direct replacement for employees there was a marked improvement in performance at that firm. This finding suggests that contrary to the conventional view of freelancers taking jobs from others, employing freelancers can actually create more employment opportunities.

The research concludes that companies need to view freelancers as specialists with the skills required to add value to their business, not as low-value workers hired to replace core employees. In other words, to achieve productivity gains, firms need to adopt a freelance-intensive model that allows freelancers to work collaboratively with existing staff in order to unleash expertise not previously available within a business.

NEW WORK PRIORITIES

A recently published report has revealed the key priorities workers would like to see form part of the ‘Next to Normal’ as workplaces emerge into the post-COVID era.

ManpowerGroup, a global recruitment and workforce solutions expert, asked over 8,000 employees, including some based in the UK, their views about the future of work. And the findings – published in a report entitled The Future for Workers, By Workers: Making the Next Normal Better for All – suggests employees typically want a more flexible hybrid model that blends working in the office and at home.

The report’s main conclusions focus on three essential elements employees want as part of a new working norm. These are the opportunity to work remotely, although not all the time; the chance to learn and develop new skills; and an ability to balance work and family life for the long term.

Jonas Prising, ManpowerGroup CEO, commented: “The data shows us how workers around the world are feeling about returning – concerned for their health and employment security while seeking flexibility which allows them to better balance work and home. Those organisations that prioritise emotional wellbeing and flexibility while demonstrating how they create social impact in challenging times will be best positioned to attract and retain the best talent and ensure workers are confident, healthy and productive.”

Other News

NEW FUNDING BOOST

Small businesses in England are being given access to additional government grants of between £1,000 and £5,000 to help them recover from the effects of the COVID-19 pandemic. The grants are fully funded through the European Regional Development Fund and can be used to purchase new technology and equipment as well as professional, legal, financial or other advice. Businesses can apply for funds via local Growth Hubs.

LONGER WORKING HOURS

Research released by NordVPN Teams suggests longer working hours are now standard practice as a result of more people working from home. According to the data, UK employees now work an extra two hours a day, with a daily average up from nine to 11 hours. The pandemic has also changed work schedules, with employees typically logging on around 9 am and finishing at 8 pm, while lunch breaks have become shorter too.

KEEP CALM AND CARRY ON

A survey conducted by Purbeck Insurance Services found that almost three in ten small businesses continued as usual during the pandemic with no assistance from the government. The research also revealed that one in five SME owners have put their home or other personal assets up as security for a business loan, demonstrating the huge financial risk currently being shouldered by business owners.