Record number of small businesses ‘set to close for good in 2021’

At least 250,000 small businesses could permanently close this year, the Federation of Small Businesses (FSB) has warned.

The FSB based its forecast on a survey of 1,401 small firms, 5% of which said they expect to go out of business this year.

If that percentage was to be applied to the UK’s six million businesses, around 250,000 small firms could close for good over the next 12 months.

That 5% estimate did not reflect the threat of closure faced by firms that had paused their operations, reduced headcounts or taken on debt.

During the three months to 31 December 2020, 23% of small firms polled had laid off staff, while a further 14% are planning to make more job cuts in the first three months of 2021.

At the same time, 49% of exporters expect international sales to decline, despite the UK securing a free-trade deal with the EU.

The FSB said that without further Government support to cope with the financial effects of COVID-19, many “viable” firms will go to the wall.

Mike Cherry, chairman at the FSB, said:

“The development of business support measures has not kept pace with intensifying restrictions.

“As a result, we risk losing hundreds of thousands of great, viable small businesses this year at huge cost to local communities and individual livelihoods.

“They were saying that [they planned to close this year] even before news of the latest national lockdown [in England] came through in early January 2021.”

Cherry praised the support for the retail, hospitality and leisure industries, but said the small business community is far bigger than just these three sectors.

“Company directors, the newly self-employed, those in supply chains, and those without commercial premises are still being left out in the cold,” he added.

The FSB said somewhere between 700,000 and 1.1 million company directors, who pay themselves in dividends rather than through payroll, are not receiving any support.

For further information on assistance with your small business, please contact Andrew Kershaw on 023 8046 1245.