With the onset of the Covid-19 pandemic in 2020, much of what we considered “normal” became a thing of the past. Businesses all across the globe and the UK were significantly affected by the pandemic, which led to massive rollback on investments and drastic cost-saving measures were undertaken. Small businesses and freelancers were impacted even more acutely since their revenue stream was limited. Three years after the pandemic, most still face difficulty picking up their business and struggle even to meet their living cost, let alone make any profit.
Those with foresight may have applied for business insurance well in advance, allowing them to make up for the loss in revenue generation while building their business all over again.. Markel Direct interviewed and took polls from 560 freelancers and small business owners to know how they are affected by the prevailing economic condition. Here are some of the takeaways.
– 78% of the interviewees experienced higher costs over the last 12 months. Out of these, 7 out of 10 experienced an increase of up to 20%, while the rest mentioned an increase of over 20%.
– The industries most affected by this cost inflation were recruitment, public services, tourism, construction, sales and marketing.
– 43% of the respondents claimed their revenue decreased over the last 12 months, worsening the financial squeeze.
– 12% of the business owners and freelancers also claimed that their revenue went up compared to previous years.
– Over a fifth of the interviewees cited the increased cost of operations as their biggest worry. Another 12% highlighted the increased cost of materials and supply, particularly, as their major concern.
– 19% also identified getting new clients as the most significant cause of worry.
Other concerns are related to retaining customers, lower profit margins, and late or no payment. All of these challenges combined have made things considerably more difficult for freelancers and small business owners to survive the crunch.
In response to these hardships, these respondents have also taken numerous steps to counter them. Some of these are.
– 34% have increased the rate or prices of their product or service.
– 24% worked more hours to compensate for the loss.
– 6% of the respondents reduced their product offering, while 5% also had to cut staff.
– Only 5% of the interviewees decided to take out a loan for the business in the last 12 months.
– Concerning their confidence in the business, 38% said they were “confident” despite difficulties, 27% were “unconfident”, while over 34% of the respondents were neutral about the topic.
Here are some quick tips to protect your business financially during such a crisis.
– Create a forecast for all your cashflow
– Cut unnecessary expense
– Widen your revenue stream
– Look for funding
– Communicate with your stakeholders
– Seek advice from professional business consultancy services.
While the current economic situation in the UK is yet to improve, the overall picture may not be as grim as it might seem despite difficulties. For example, suppose the country could endure two significant wars and economic downfall at the turn of the century. In that case, the UK can get through an economic slowdown because of a pandemic already on the verge of an end.