5% of SME companies could shut their doors for good this year, according to FSB poll
13th February 2021 12:09 - Business Support
5% of SME companies could shut their doors for good this year: A survey conducted by the Federation of Small Businesses has revealed the ongoing struggle faced by small firms as a result of Covid-19 and warns that more than 250,000 small businesses are at risk of collapse if they go any longer without financial support from the government.
The FSB’s quarterly Small Business Index survey polled 1,400 firms in December 2020. It found that almost a quarter of businesses (23%) have had to cut their number of employees in the last quarter of 2020, up from 13% in January 2020. It is expected that these reductions will only increase as lockdown continues, with one in seven firms polled (14%) expecting to have to let staff go in this current quarter.
The FSB report that in the survey's 10-year history, business confidence has fallen to the second lowest level ever seen by the Index, with the first being in March during the first national lockdown. The UK risks losing hundreds of thousands of small businesses this year, warns the report, which will jeopardise local communities and individual livelihoods, as reported by the FSB chairman, Mike Cherry. The chairman described the efforts made by the government as “disappointing”.
When asked about their predictions for next three months, 80% of companies or organisations polled do not expect business to improve.
The research also found that 58% of the firms polled are forecasting a decline in profitability over the next three months, up from 38% 12 months ago and a record high for the Index.
Exporters also expect sales to fall this quarter (49%), up from a 33% 12 months ago.
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