As businesses begin to reopen across the country, new research reveals that SME owners are having to spend on average £21,830 to fully reopen, with over a fifth planning on using their personal savings to cover the costs.
This comes at a time when SMEs have already reported an average loss of £251,471 (sole traders: £8,671, micro: £47,218, small: £364,128 and medium: £665,299) due to the impact of Covid-19, according to the research.
For businesses that have already re-opened following Lockdown, implementing new health and safety measures was the biggest cost factor, followed by salaries and reconfiguring the layout of the space.
While the top three factors remained the same for businesses of all sizes, investing in new technology and introducing new contactless payment systems were noted as a much larger concern for medium-sized businesses (51-249 employees), standing at 28 per cent and 22 per cent respectively.
The research found that on average these SMEs have £29,983 of cash reserves available. But many business owners are reluctant to use all of this to reopen as it could leave them in a vulnerable position if economic activity does not improve.
we, as an industry, need to highlight the role that finance can play in the short-term, but also to support longer-term business goals and help them future-proof their business
Rather than approach a bank or an alternative lender to help with cash flow, 28 per cent plan to use cash reserves, over a quarter are considering using Government support schemes including CBILS, BBLS and CLBILS, and a fifth plan on using personal savings for reopening costs.
Chirag Shah, CEO, OF Nucleus Commercial Finance, the company behind the research, said: “The past few months have been a turbulent time for businesses both large and small across the country. Not only has the loss of income been devastating for many SMEs, but those businesses that are able to reopen in some capacity now face significant costs to ensure they can operate safely, putting a further strain on business finances.
“We need to help SMEs not only survive the current pandemic, but thrive in the future. As such, we, as an industry, need to highlight the role that finance can play in the short-term, but also to support longer-term business goals and help them future-proof their business.
“During these uncertain times, business owners should rest assured that there are options available, and it’s our duty as an industry to educate them on the benefits of external finance. Together, we can help build a better future for SMEs, ensuring they are equipped to tackle further challenges, boost performance, and ultimately stimulate our economy.”