Nearly one in five small businesses have seen a 70 per cent decrease in income, according to new research.
Typically, the average small or medium-sized enterprise has seen 30 per cent of their monthly taking shaved off, according to new research by Aldermore Bank.
To survive, many businesses have taken proactive steps to protect their income with lockdown two in England different from the first, as many businesses have adapted to keep trading and have been more prepared.
Shifting gear: Many SMEs have diversified by selling other products or venturing into services they’ve offered before
Two in five SME owners have adjusted business plans due to the pandemic, the research adds.
This is due to an anticipation of a fall in revenue, more lockdowns and an ongoing economic downturn.
The resilience has been demonstrated in different ways with companies adopting a range of strategies. The vast majority of SMEs have looked for ways to shift where their income comes from, according to Aldermore.
A fifth have increased the way they communicated with customers; 18 per cent have moved their business online, while 10 per cent have pivoted to a new market (up from seven per cent in April 2020).
Here eight SME owners share their transformations with This is Money in the wake of Covid-19 and have seen it as a catalyst to adapt or to try something new entirely:
1. Chocolate tours switched to online
The pivot: From walking tours of London’s chocolate scene to mystery online tastings
Jennifer Earle ran and managed Chocolate Ecstasy Tours, which offered walking tours of London’s chocolate boutiques gelaterias and patisseries.
Jennifer Earle has been able to reach more people than just those touring in London by heading online
But when the Covid-19 pandemic hit she had to shut down the tours which she’d been running since 2005.
But she’s since pivoted to offering mystery chocolate tastings.
‘I stopped the tours in March because of the pandemic.
‘In June I started receiving, packing and re-posting chocolate to people for online “Mystery Chocolate Tastings”‘.
‘I run them for the public once a month with special foodie guests and for businesses and other private groups on request.
‘The positive is I’m reaching people who can’t make it to London as well as people who live here.’
The pivot: From walking tours of London’s chocolate scene to mystery online tastings
2. I’ve had to stop selling eco-travel goods
The pivot: Eco-conscious travel goods switched to a product used everyday
Alex Stewart, founder of OneNine5, which designs eco-conscious travel goods said he saw a decline of 95 per cent in his sales earlier this year as the global travel market shut down.
Alex explains: ‘In response, we’ve had to move our product strategy away from global travel goods into the everyday requirements that people have.
‘We’ve just launched our Eco Essentials Pouch, which is a unisex and multipurpose design for people to carry their everyday essentials and valuables inside their bag or backpack.’
Alex’s Essentials Pouch order will ship at the end of this month in time for Christmas gifting.
He adds: ‘With the shutdown of travel corridors and 14-day quarantines, consumer confidence towards global travel is still low and our Eco Essentials Pouch for everyday use is outselling our Eco-Conscious Wash Bag by four times.’
Alex Stewart, founder of OneNine5, holds his unisex and multipurpose design that keeps daily essentials organised
3. I’ve switched from selling travel packages to… logs
The pivot: Travel bookings gone and kiln logs now delivered UK-wide
Earlier this year, Jonathan Baylis saw his travel business Aglow Pilgrimages hit the buffers.
Jonathan Baylis went from owning a travel business to selling logs
He says: ‘I saw bookings fall off a cliff mid-March, pretty much around the start of the first UK lockdown. Since then, bookings flat-lined.
‘As I scrambled to rebook clients onto departures in September and October in a desperate attempt to try and salvage the year, I wasn’t convinced that travel would pick up again.
‘This was the catalyst for the new business idea.’
He launched online service Logsnearme in just a few weeks.
It now delivers dried kiln logs from Eastern Europe to a warehouse in Somerset, which delivers the logs to anyone living in the UK.
Even though business is booming, he has hit one snag. ‘I’m now in discussions with new firewood suppliers as our current supplier can’t handle the capacity of orders that we’re receiving.
‘I believe this business will be significantly more lucrative than my travel business within the next 12 months and my ambitions are to turn Logsnearme into the number one supplier of firewood in the UK.’
4. I’ve created an online marketplace for children
The pivot: From offering activity workshops to creating activity kits sold online
Rachel Conlisk ran a non-profit organisation that delivered activity workshops to the disabled and those suffering from dementia. She catered to schools, care homes and kids’ clubs.
She says: ‘We had to stop everything, so I created a range of unique activity kits that we retail on our new online store.
‘I did everything myself, designing, sourcing, putting together kits and even the web development of an online store.
Rachel Conlisk’s son Sam Bennett (pictured) makes electronic circuit activity kits that are the best sellers for his mom’s business Creative Active Lives CIC
But she says her best-selling product is designed by her son, Sam Bennett. ‘It’s electronic circuit activity kits that teaches kids how to build simple electronic circuits.
‘It’s for total beginners. He even sourced all the products and they’ve been flying out.’
She’s also created an online marketplace called Off The Beaten Track, which allows other small business to sell subscription boxes, activity kits and ethical gifts to sell online.
She says: ‘We aim to become like Etsy crossed with Not on the High Street, only bigger and better and child centred.’
‘We’re currently letting business apply to sell in December. We know how hard it is for small busines and to get their products out there.’
5. I launched a singing studio with 11,000 members
The pivot: Taking a singing studio from London to online and diversifying the classes
Rachel Lynes owned and managed an in person singing studio, The Sing Space, in London.
She says: ‘On the first day of lockdown I dragged my keyboard from Soho to Wiltshire and started offering free vocal warm-ups on our Facebook group,’
At the time she had only 250 members but within five months this ballooned to 11,000 members.
Instead of charging her usual £15-30 an hour she initially offered lessons for free.
But she’s since created a professional model where she charges around £5 a week and allows professional singers to use her platform to teach amateur singers.
She adds: ‘The Sing Space is now an international online singing studio offering 121 singing lessons, mentoring for professional singers, West End fitness classes and our new Vocal Gym.
‘It’s been a crazy journey, especially as I’m the only breadwinner in my family and with four children under seven years old!.
Rachel Lynes owned and managed an in person singing studio, The Sing Space, in London. It has now evolved into an international singing studio with 11,000 members
6. I’ve launched multiple products from advent calendars to date night treats
The pivot: Wedding cake business to treats for other occasions
Kate Tynan owns and manages a wedding cake business, Little Button Bakery, but when that saw a decline in sales due to Covid-19 restrictions she started offering a variety off different products.
Kate, who’s based near Manchester, says she didn’t want to offer something similar like birthday cakes.
She says: ‘Instead I’ve come up with all kinds of new products to help keep me afloat. I started making gift boxes, advent calendars, date night boxes, treats for other events like Halloween.
‘I’m a one-woman band and ran a super successful award-winning wedding cake business before this. I still want to be here after it, so I’ve had to diversify massively.
She says that since she pivoted she’s had a variety of new clients. ‘I’ve got a lot of corporate orders for December.
‘One is for a financial company who ordered 250 gifts for their employees instead of having Christmas celebrations. I am also working with a few smaller brands who typically want around 20 gift boxes.’
Instead of making cakes full time for a living Kate Tynan sends out corporate and personal gifts
7. I went from selling takeaways to delivering groceries, PPE and hygiene products
The pivot: Restaurant that closed down delivers groceries, PPE… and dinner
Lauren Reading who owns a small restaurant specialising in modern British cuisine called Truly’s in Westbourne initially started doing takeaways.
She then added other services and products such as delivering groceries, PPE and hygiene products. She also sold over three tons of flour during lockdown.
Lauren says: ‘These things saved us in the first lockdown, and we have continued to offer them since we reopened in July. So, we are ready to go with these services again but supermarkets stock it now.
‘We had enormous support from the local community in round one because people couldn’t get delivery slots for supermarkets and no one could get things like sanitiser, gloves, soap and masks from anywhere but I could using my catering, cleaning and gin suppliers, which are all local businesses.
‘We even sent PPE items as far as Wrexham and Essex to people who couldn’t get hold of what they needed.’
Restaurant owner, Lauren Reading, delivered groceries, PPE and sanitising soaps to people that couldn’t order any from the retailers
8. I went from wedding florist to selling house plants online
The pivot: Weddings off the cards so turned to selling house plants
Gemma Hales, owner of wedding florist Iris & Co was made redundant from her main pharmaceutical job this year.
Gemma Hales, is relying on selling indoor plants to top up her income that she lost from the wedding florist side of the business
In addition to that her wedding bookings were drying up.
She explains: ‘I’ve had a few weddings but nothing to what it would normally be. I’ve even lost next year’s dates and ones that were booked in 2022.’
She decided to sell houseplants online to help cover the bills. ‘I’d always liked house plants and thought I could do something with it.
‘I noticed my wholesaler did houseplants, so I bought a green house and it grew from there.
‘It wasn’t a great time to be made redundant, but I thought let me take it and see what happens.’
She admits her house plant sales are doing well but she still relies on her wedding side of the business to keep afloat.
She explains: ‘I’d charge a minimum of £2,500 for weddings but house plants are selling enough to pay my bills and expand in other areas of the business. Weddings do remain a big part my business.’
Have businesses applied for financial aid?
Few have applied for financial aid to bail them out of their financial difficulties.
According to Aldermore Bank just one in 12 of SMEs have applied for a loan through the Coronavirus Business Interruption Loan Scheme and only seven per cent have applied via the Bounce Back Loan Scheme.
More SMEs have instead decided to cut costs in order to survive. Two thirds have cut costs to cover their losses making an average saving of 25 per cent on business expenditure.
Aldermore says: ‘Strategies have included reduced operating costs and discretionary spending.’