One in five small businesses could permanently close in 2022 without strong Christmas sales

This Christmas is crucial for the majority of SMEs, with 60 per cent banking on a successful period as a lifeline for their business.

A quarter (24 per cent) claim a successful season would mean they could be back to pre-pandemic levels within six months. While one in five (21 per cent) say it would aid full recovery by the end of 2022.

The findings are from a poll of 587 small business owners conducted by Simply Business.

In the study, more than a third (36 per cent) say they make over 20 per cent of their annual revenue in the golden quarter. With this in mind, almost one in five (16 per cent) SMEs say their business won’t survive 2022 unless they have a successful Christmas. And more than a quarter (27 per cent) are ‘not confident’ about their chances of a successful festive period.  In fact, one in 10 SMEs (10 per cent) expect sales to be worse than last year.

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, 18 per cent say their business would take longer to recover from Covid-19. Furthermore, one in 10 (10 per cent) would need to put business expansion plans on hold, denting the growth of the UK economy.

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 per cent) are still struggling to recover financially. Without a boost this Christmas, owners expect their recovery to take 6-12 months (30 per cent) or 12-24 months (25 per cent) longer than planned.

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 per cent) and therefore earning enough to keep their operation alive into 2022 (17 per cent).

What’s more, one in five (21 per cent) 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 per cent) 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, resourceful business owners are taking a number of steps to better prepare their business for the challenging festive season this year.

Over a quarter (28 per cent) 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 per cent and 14 per cent respectively).

One in 10 (10 per cent) have also set up an online store for the first time – helping them reach new customers and capitalise on the growth in online demand, fuelled 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.

“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.

“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.

“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.”

Simply Business is highlighting the need for consumers to support small businesses by re-recording the Christmas classic ‘I Wish It Could Be Christmas Everyday’ with SMEs. Small business owners can sign up to feature in a music video via its website.

Photo by Danny Lines on Unsplash