How the UK’s creative small businesses have coped with COVID-19

For the UK’s creative and cultural businesses, the COVID-19 outbreak and subsequent lockdown presented unprecedented challenges and a huge financial impact. To survive, they needed to be creative, and rethink the way they did things.

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Before COVID-19, the UK’s creative industries were thriving.

Once the pandemic struck, however, everything changed almost overnight. Cinemas, theatres, concert venues and nightclubs were forced to close, social distancing became the order of the day, and creative small businesses had to find new ways of working.

This article will examine the financial impact on this hugely important sector, and give some examples of how creative small businesses have adapted to survive.

How has the UK creative sector been affected by COVID-19?

Before the coronavirus hit the UK, the creative sector was growing rapidly and making a significant contribution to the national economy.

A report produced by Oxford Economics on behalf of the Creative Industries Federation demonstrates this.

(In terms of methodology, the report uses the Department of Digital, Culture, Media and Sport (DCMS) definition of creative industries, which encompasses the following sectors: advertising and marketing, architecture, crafts, design and designer fashion, film, TV, video, radio and photography, IT, software and computer services, publishing, museums, galleries and libraries, and music, performing and visual arts.)

According to DCMS data, in 2018, the UK’s creative industries contributed £111.7bn to the national economy. In real terms, this total had grown by 43.2% since 2010.

Overall, in 2018, these industries accounted for 5.8% of the UK’s gross value added (GVA) (which, very roughly, equates to GDP minus tax income).

They were also an important source of employment, and employed 2.10 million people in 2019 – an increase of 34.5% from 2011.

Under both measures, growth far outpaced the improvement in the overall UK economy.

COVID-19 impact

By looking at estimates of how the UK’s creative industries would have fared without the impact of COVID-19, then comparing them with industry data and surveys on how companies’ finances and employment numbers have been impacted by COVID-19, the report gives a good idea of the overall impact of COVID-19 on the UK creative industries.

There are three key headline figures.

  • Turnover is expected to fall by £77bn (or 31%) across the creative industries due to COVID-19
  • COVID-19 is expected to cause 409,000 job losses across the creative industries (with freelance roles accounting for the majority of this total)
  • Assuming constant average company size, COVID-19 could cause the number of creative businesses to fall from 296,000 in 2019 to 280,000 in 2020

Given these figures, it’s no wonder that a loud SOS call went out across the creative industries.

Stars of stage and screen (including James McAvoy, Phoebe Waller-Bridge, and playwright Tom Stoppard) signed an open letter that warned the UK theatre industry was on the brink of collapse without extra funding. Meanwhile, the Let The Music Play campaign recruited stars like Paul McCartney, Ed Sheeran, and The Rolling Stones to urge the government to save the UK’s live music venues.

Individuals were also hit hard, with reports suggesting that many artists weren’t eligible for government support due to the often complicated nature of their financial situations.

Eventually, the government responded, announcing a £1.57bn arts rescue package in a bid to save everything from basement gig venues to the National Theatre.

Although crucial details regarding this rescue package are yet to be revealed, it already seems pretty much certain that this won’t be enough to save everyone. The package may have simply come too late for some venues, with the permanent closure of Nuffield Theatres Southampton being the most prominent cultural casualty of COVID-19 so far.

And, while socially distanced theatre and music performances will be permitted from August 1 (provided pilot events are successful) as part of the government’s gradual loosening of lockdown measures, key questions remain over the profitability of, and demand for, socially distanced live events.

So, even if they successfully receive government funding (which is far from a given), small businesses in creative and cultural sectors will need to have an agile mindset and adapt in order to survive in a vastly different business environment.

Case studies

Here, we take a look at how two creative industries SMEs have reinvented their working practices to weather the COVID-19 storm.

Jist Studios

Jist Studios Headshot

Manchester-based Jist Studios produces videos for brands, agencies, businesses and broadcasters, and faced two key challenges as a result of the COVID-19 lockdown.

One of these was financial – projects were paused, and demand fell. Indeed, the Oxford Economics report discussed above predicted a £4.2bn drop in advertising spend due to COVID-19.

The other was creative – big shoots teeming with people were out, and the company had to start producing compelling content while keeping people safe and adhering to the coronavirus guidelines.

Jon Stroud, Creative Director at Jist Studios (pictured above), shares how they tackled these twin obstacles, starting with how the company managed to keep money and projects coming in during lockdown:

‘‘Financially, COVID has been an interesting ride. And as the founder and only director of the firm, it has been stressful at times.

‘‘We had to put two big projects on pause as lockdown hit, including a big advert which is still on ice. Once it was clear that some form of lockdown would be in place for the longer-term, thoughts moved to how we could either a) produce new content for the brands we already work with during lockdown, or b) adapt previous plans to work in this new world.

‘‘Thankfully, we managed both. We’ve been lucky enough to take on new projects with existing customers, helping them with their content needs whilst many brands went quiet. It’s been really interesting working out what we can and can’t do. It’s forced some very creative thinking.

‘‘The Government support schemes have also been a great help, including a small business rates grant from Manchester City Council. Owing to our continued workload, furlough wasn’t going to be an option for the whole team, but we have furloughed one junior member of staff.”

Jon also stresses that, despite the challenging circumstances, he wanted to invest for the future growth of his company. To this end, he took the unusual step of hiring and onboarding a new staff member during lockdown.

Just as importantly, he notes that the pandemic meant finding a whole new way of working:

Jist Studios - Covid 19 video shoot

‘‘As a team of video content creators, we work in lots of different environments – everything from the traditional studio set-up to filming a documentary on the road, to animation. What all of these have in common is people coming together – camera operators, producers, lighting, actors, clients… the list goes on.

‘‘Social distancing means getting a full cast and crew together hasn’t been possible, and that’s where I’ve seen a lot of lost potential. ‘Let’s just wait until lockdown’s over and pick it up then.’”

“But failure to think creatively means organisations lose out on huge opportunities to continue storytelling and connect with people, at a time when human interaction is more important than ever.

‘‘At Jist, we’ve been developing and adopting several techniques to deliver content with personality. We recently delivered a social media campaign for a household FMCG brand that involved sending out GoPros to contributors. We provided tutorials on how to use them, along with a very clear brief, and sent them on their way.

“For another project in the depths of lockdown, we tasked people with re-enacting a video call with colleagues in their kitchens while enjoying breakfast, all recorded over a video conference. And we’ve just spent three days based out of a camper van filming on location, wearing full PPE on one the hottest days of the year to deliver a re-imagined version of a project we pitched pre-lockdown.

“The result across all of these projects is candid, relatable, and shareable content that doesn’t fall into the trap of COVID-fatigue.

“The biggest challenge has been casting and locations. Where a lo-fi approach with phones or GoPros won’t suffice, we’ve had to think about how we work in-line with industry best practice, which has been constantly developing.

“Skeleton crews, live streaming content to clients from location (from the back of a camper van!), as well as casting contributors who are willing to allow us to film in their own home as a location.

Production has always been a multi-skilled jigsaw puzzle – now more so than ever before.”

Despite these challenges, Jon remains defiant and passionate about his work, describing COVID-19 as the embodiment of “whatever doesn’t kill you, makes you stronger.”

Above all, he points out that “‘Stories don’t stop because of COVID-19. Storytelling doesn’t need to stop because of COVID-19. Therefore, our business needn’t stop because of COVID-19.”

Badapple Theatre

Badapple Covid 19

Badapple Theatre, a regional touring theatre company based in rural North Yorkshire, arguably faced an even tougher test.

Once COVID-19 struck and the country was locked down, Badapple suddenly found itself with nowhere to perform and no source of income.

Artistic Director Kate Bramley (pictured above) shares how the company reacted, giving insight into their pre-COVID business model, how the company pivoted to a new model of distribution, and what things might look like going forward:

Our theatre business turned over £101,000 in the last financial year, with three live touring projects as well as our Youth Theatre and Community Theatre courses (again all live).

This means we make a massive annual investment in freelancers – writers/designers/directors etc. – for touring work when we have relatively few overheads.

When the virus was first starting to spread in Feb 2020, we had 30 performances of a new touring piece, ‘Elephant Rock’, scheduled at community venues nationwide. Our team moved swiftly to reschedule them for the autumn of 2020, although now they are having to move again to 2021.”

Badapple theatre Covid 19

To cope with this, Badapple shifted from its previous model of “theatre on your doorstep” to “theatre on your desktop”. They used Arts Council funding to start an episodic audio podcast, which presented its previous shows in a new way to a new audience:

“The design and value of the ‘Theatre on Your Desktop’ Project in early March was to keep our creative team afloat, and produce new work in a new format for our audiences. It has invested £11,295 of Arts Council Emergency Funding into the creation of new artistic projects online.

It has also enabled our wider team to keep positive, and connected AND provided our unique style of comic storytelling to audiences at home.

“But we would have been unable to change our model so quickly, or support our wide base of performers and creatives, had it not been for the swift and positive intervention of the Arts Council.

“We were already in full support of their #Let’sCreate programme, which stresses the importance of connecting high quality arts with local communities, and are extremely grateful for the lifeline we were thrown from them.”

However, Kate warns that this switch can only be a temporary measure, and is scheduled to end in September. Beyond that, the future is uncertain – their full live tour programme is currently scheduled for April 2021, and even once live indoor performances are permitted, it’s extremely difficult to make socially distanced theatre work financially:

“For us, and so many other organisations, it is the length of the lockdown that will prove to be the greatest problem. And by that I mean the return to groups of people being able – and confident – to assemble indoors.

We will certainly need further subsidy if we are to change our business model again to accept fewer audience members at live venues, to move from 65-100% capacity (our usual) to 30-50% capacity with social distancing measures in place.”

Other approaches

Of course, these are not the only approaches adopted by creative UK small businesses. Some have launched crowdfunding campaigns, some have expanded merchandising operations, and swathes of musicians have turned to live-streaming as a way to, at the very least, keep getting their name out there and engage with their fan-base.

Almost all enterprises, though, have had to adapt in order to survive this new economic reality.

Tips on steering your creative business through the COVID crisis

The right approach for your creative small business in these challenging times will depend on your particular circumstances and resources, but a few key points emerge from these success stories.

  • Find out what help is available – When trying to formulate a plan to keep your business going, make sure you check what financial support you might be eligible for. Whether it’s utilising the furlough scheme, getting a small business grant, seeking Arts Council funding, or taking out a government-backed coronavirus loan, there are options for a wide range of businesses, so checking the requirements of each is a key first step.
  • Think creatively – It’s a bit of a cliché, but try to focus on what you can do, rather than you can’t – the challenges posed by the COVID-19 lockdown are significant, so it’s time to think outside the box, and come up with new ways of producing content and getting it out there.
  • Stay positive – At such a challenging time, your employees and colleagues will be looking to company leaders for emotional and practical support. It’s therefore crucial to retain a positive mindset, and show that your passion for what you do is as strong as ever. If difficult decisions need to be made, make sure that you’re honest about the reasons why, and do everything you can to support those working for you.

Despite the rescue package, there’s little doubt that tough times are ahead for many of the UK’s creative and cultural businesses, As such, these points are likely to remain hugely important in the months, and maybe even years, ahead. wishes you all the best of luck.

Written by:
Alec is Startups’ resident expert on politics and finance. He’s provided live updates on the budget, written guides on investing and property development, and demystified topics like corporation tax, accounting software, and invoice discounting. Before joining, he worked in the media for over a decade, conducting media analysis at Kantar Media and YouGov, and writing a wide variety of freelance pieces.
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