Almost one in five (16%) small business owners in the UK said their business won’t survive the next year if they fail to have a successful Christmas sales period, according to a new study by small business insurer Simply Business.
The window between Black Friday, which this year falls on 26 November, and Christmas is a crucial time for many small businesses, with more than a third (36%) saying they make over 20% of their yearly revenue during this time.
However, small businesses are worried this year as more than a quarter (27%) are "not confident" about their chances of a successful festive period. One in 10 even said they expect it to be worse than last year, when the UK was in the midst of COVID-related restrictions.
Two-thirds (60%) of small business owners said a good Christmas season would be a lifeline for their business — with 43% still struggling to recover from the financial impact of the pandemic.
Almost a fifth (18%) said their business would take longer to recover from COVID-19 if they fail to see good business in December. One in 10 would need to put the brakes on plans for growth and business expansion, which would impact the growth of the UK economy.
One in 10 said they’d need to rethink their entire business, and a further 11% would need to give up this business to go back into permanent employment.
The biggest challenge for small businesses this Christmas will be attracting enough customers, with 21% stating that this worries them the most. Earning enough to keep their operation going into the new year is the biggest challenge for 17%.
One in five (21%) are concerned about the current supply chain issues that are hitting the UK. Businesses are worried that they may not be able to deliver goods to customers, or source the stock they need.
Over half (52%) of businesses are afraid that further restrictions or lockdowns will be introduced if COVID cases rise and are worried about about the negative effects that might have on business.
With that in mind, many small business owners are taking steps to better prepare their business for a challenging Christmas period
Over a quarter (28%) have taken more time to promote their business or spent more money on advertising, while 15% have experimented with new or additional product lines or 14 have bought more stock.
One in 10 have also set up an online store for the first time, helping them reach new customers and capitalise on the boom in online shopping brought on by the pandemic.
Alan Thomas, UK CEO at Simply Business, said: “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.”