Omicron causes surge in cancellations for SMEs

Figures released by the Office for National Statistics have revealed the sheer scale of cancellations that UK small businesses experienced last month, as fears over the Omicron variant and Plan B rules took hold.

Results from the government’s recent fortnightly business survey show almost one in five small business respondents (19%) experienced increased cancellations in November and December 2021.

Understandably, the hotel and restaurant sector has been hit hard – some 45% of business owners in this sector reported a negative impact of customer cancellations.

But the wider service industry has suffered, too, with 50% of all businesses – including hairdressers and beauty salons – experiencing reduced customer bookings.

Covid-19 cases are still being reported at an alarming rate, continuing the disruption into the new year.

Impact of remote working hits SMEs

In early December, the government announced that all UK workers who could work from home should do so.

Consequently, the much-needed bumper Christmas period slowed, as consumer caution about catching or spreading the virus grew.

Staff shortages have also been hurting businesses, as workers are forced to self-isolate following a positive Covid test result.

The government data showed that more than a third (37.9%) of UK businesses are currently experiencing a shortage of workers.

% of businesses not permanently stopped trading, broken down by industry, UK, 29 November 2021 to 26 December 2021 [Data from BICS survey]

Online sales help to cushion the blow

As a result of the pandemic, many small businesses pivoted online, accelerating an expansion of e-commerce towards new firms, customers and types of products.

Customers have been given access to a significant variety of products from the convenience and safety of their homes. This has meant that some UK firms have been able to continue operation, despite moving in and out of various coronavirus measures.

What help is available?

The crucial Christmas retail and hospitality period may now be behind us, and for many businesses, the loss of footfall had a devastating impact. Government support is now available to ease some of the burden for suffering businesses. The support on offer varies by region:

England

Hospitality and leisure firms in England, as well as their supply chains, are now able to access grants of up to £6,000 as part of new government support introduced to lessen the impact of Omicron on small businesses.

More than £100m is also being made available to the Additional Restrictions Grant fund, which councils can give out at their discretion to businesses in need.

Grants will be a one-off support payment from their Local Authority. Businesses are encouraged to apply to their council for grant funding which will be administered over the coming weeks.

Scotland

A similar £107m scheme has been announced for Scottish SMEs.

Hospitality businesses will be contacted by their local authority to access top up funding through the December and January Business Top Up.

Wales

The Welsh Government has announced that £120m will be made available for leisure and hospitality firms, and has also decided to extend support to non-essential retail SMEs.

This will take the form of Non Domestic Rates (NDR) linked grants of up to £6,000. Local Authorities will also deliver a discretionary fund to support sole traders, freelancers and businesses who don’t pay rates, with grants of £500 – £2000.

On top of NDR based grants, the Welsh Government’s Economic Resilience Fund (ERF) will see up to £25,000 made available for businesses which have seen a reduction in their turnover of more than 60%.