Almost one in five (16%) small business owners say their business won’t survive 2022 unless they have a successful Christmas sales period – with this year’s festive season a much-needed lifeline for the self-employed.
The study by small business insurer Simply Business published ahead of Black Friday – a key Christmas shopping window dominated by retail giants – also revealed that more than a third (36%) say they make over 20% of their annual revenue in this window, highlighting its importance to their success.
Given the weight small businesses place on Christmas, it’s a worrying sign that more than a quarter (27%) are ‘not confident’ about their chances of a successful festive period. One in 10 (10%) even expect it to be worse than last year, when restrictions and localised lockdowns were commonplace.
At the same time, two thirds (60%) of small business owners state a good festive season would be a lifeline for their business – with many still looking to recover from the devastating impact of Covid-19.
Consequences of a challenging festive trading period
A bleak festive trading period could prove fatal for many small businesses. Covid-19 has already cost SMEs a combined £126.6bn, and a difficult Christmas would only further impact their recovery.
Without a strong December, a fifth (18%) say their business would take longer to recover from Covid-19. Furthermore, one in 10 (10%) would need to put business expansion plans on hold, denting the growth of the UK economy.
Even more worryingly, one in 10 (10%) say they’d need to rethink their entire business, and a further tenth (11%) would need to go back into permanent employment.
Small businesses are in a crucial phase as they look to bounce back from the pandemic. The study revealed that well over two in five (43%) are still struggling to recover financially from the impact of Covid-19. Without a boost this Christmas, owners expect their recovery to take 6-12 months (30%) or 12-24 months (25%) longer than planned.
The study also revealed how a strong festive trading period could provide a huge boost to the self-employed in their battle to recover from the effects of the pandemic.
If small business owners were to have a bumper Christmas, one in five (21%) expect it to speed up their business’s recovery by 1-3 months. A quarter (24%) say they’d be back to pre-pandemic levels within 6 months, and one in five (21%) say it would help them to be fully recovered by the end of 2022.
The challenges facing owners this December
Small businesses have suffered with the impact of Covid-19 for more than 20 months – and it looks unlikely that the challenges will ease any time soon.
Owners say their biggest challenges this Christmas will be attracting enough customers (21%) and therefore earning enough to keep their operation alive into 2022 (17%).
What’s more, one in five (21%) believe current supply chain issues will hit them hard – with ongoing challenges in getting goods to customers, or sourcing the stock they need.
Meanwhile, more than half (52%) live in fear of future lockdowns and tighter restrictions, and the impact that would have on their businesses.
How small businesses are looking to capitalise on Christmas
With so much at stake for the self-employed, resourceful owners are taking a number of steps to better prepare their business for the challenging festive season this year.
Over a quarter (28%) have taken more time to promote their business or spent more money on advertising, while others have experimented with new or additional product lines or bought more stock (15% and 14% respectively).
One in 10 (10%) have also set up an online store for the first time – helping them reach new customers and capitalise on the growth in online demand, fueled by the pandemic.
Alan Thomas, UK CEO at Simply Business, comments: “While much of the UK prepares for a period of well-earned festive cheer, the feeling among small business owners is likely to be rather more sombre this Christmas.”
Thomas continues: “Few have been harder hit in the last two years. They’ve faced the pandemic head-on, navigated supply shortages, and adapted to a new normal. They’ve shown resilience in abundance and done all they can to stay afloat. But without a bumper Christmas trading period, one in five small businesses will permanently close in 2022.”
He adds: “It’s vital we support small businesses this Christmas. And if anything, the pandemic has served as another reminder that we should be supporting them all year round. They’re the lifeblood of our local communities, and with close to six million of them in the UK, together they contribute trillions of pounds in turnover. They are quite simply the backbone of the economy.
Thomas concludes: “This Christmas needs to right the ship after a challenging two years, and set them up for recovery in 2022. But small businesses are for life, not just for Christmas – they wish it could be Christmas everyday. So at Simply Business we felt compelled to highlight this by teaming up with a host of small business owners to re-record the Christmas classic ‘I Wish It Could Be Christmas Everyday’. Small business owners can sign up to feature in our music video via our website, as we look to make it Christmas every day for small businesses.”