Small businesses will be hit the hardest by coronavirus with turnover expected to halve for at least 70 per cent, new research suggests.
The study reveals that micro businesses that employ around nine people each could be more vulnerable as they lack insurance to deal with the coronavirus losses.
Many of these small businesses are also not eligible for government support or uncertain how to access the advice.
Micro businesses account for 96 per cent of the UK’s total business population, contributing £533 billion to the economy.
Researchers at the University of Sheffield surveyed over 1,500 micro business owners and found that 67 per cent now “very” or “somewhat” lacking in confidence, with just two per cent very confident about their prospects – believed to be some of the worst figures on record.
They also found that 78 per cent said cash flow was their biggest problem, followed by 58 per cent saying drop in customer demand and 27 per cent concerned about difficulty accessing finance.
The overwhelming majority (93 per cent) do not have any insurance to mitigate losses caused by the Covid-19 pandemic.
The study found that businesses found that the biggest challenge was finding a way to support small businesses where services have suspended or ceased.
The University of Sheffield academics have called on the government to prioritise support for these firms, allocating resources according to the greatest levels of need.
There has been a significant shift to online shopping, with one in three looking to sustain their business online and 26 per cent offering new services online.
Lead author Professor Tim Vorley, Chair in Entrepreneurship at the University of Sheffield, said: “Much of the government’s focus so far has been on SMEs and larger companies, but micro businesses represent a significant proportion of our economy, and are especially vulnerable to this unprecedented socio-economic shock.”
Many are also uncertain whether they qualify for a small business grant and are not accessing business support.
Dr Cristian Gherhes, a Research Associate at the University of Sheffield, said: “Our research is revealing that confidence among the UK’s smallest businesses is at rock-bottom, with most expecting to see more than half of their gross income wiped out by the coronavirus crisis.
“Most of these businesses don’t want to give in to the pressure of the pandemic. But they urgently need further support and clarity over when funds are going to be made available if they are to survive the crisis.”
The study concludes that micro businesses are taking a positive view on the government’s support package but fear the uncertainty around how quickly they will receive financial aid and many are frightened of the collapse before support reaches them.
The researchers are calling for ministers to ramp up financial support and access to advice for the smallest businesses to ensure their survival.