Short-term Impact of COVID-19 on Businesses in the UK

A Proposal
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 Introduction
The global pandemic caused by the worldwide spread of the COVID – 19 virus has had lasting
impacts on businesses globally. Such phenomena as laying-off workers, reduced wages,
reduction of welfare considerations for employees, and reduced corporate social responsibility
have become common as companies struggle to stay afloat in a pandemic that is considered
unmatched in global history (Nicola et al., 2020). While businesses exhibit these strategies to the
public, the impact is felt throughout the economy, with thousands of dependent families
experiencing the impact firsthand. In the UK, this impact is deeply felt by big and small
businesses throughout the country's SME sector. On the other hand, several companies have
profited from the pandemic situation (Ibn-Mohammed et al., 2020). This document proposes
research into the short-term impacts of COVID – 19 on various businesses in the UK's SME
sector.
Past Research
Academic research into the events before and after the global economic crisis of 2008 indicated

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that the economic downturn resulted from neglect and vicious economic assumptions. It was

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possible to identify the origin of the crash, which was crucial in picking up global economies

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post the crisis (Buckley, 2011). Any kind of global crisis in the past has had a negative economic

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impact, with each country suffering unique challenges. The first perks of effects are felt in global

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financial markets before this effect spirals into the real global economy and individual countries'
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financial markets (Fernandes, 2020). Businesses that benefit directly from financial market
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performance may be among the first to experience the adverse effects of the diminished supply
of credit in the market and an increase in the cost of accessing finances for business in the
economy. The most affected are small and medium-sized enterprises that face specific challenges
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relating to small ownership structures and capital inadequacy, and limited access to strategic
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information on the national or global economy (Cowling and Matthews, 2018).

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In some cases, SMEs are over-reliant on funds generated internally, such as sales revenues and
internal income, to cushion them against uncertain situations and capitalize on business
operations in times of economic hardship (Syriopoulos, 2020). They may lack tangible assets that
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may be liquified to fund daily operations or used as collateral for financial loans. As such, SMEs
experience the impacts of economic downturns firsthand, and these impacts may be more severe
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compared to businesses with the necessary financial and resource backing.

The COVID – 19 pandemic is no different. Businesses have faced the risk of running out of
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resources and finances used to run the business entirely. Some companies have closed down as a
result. The global lockdown instituted by the World Health Organization caused a resultant
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reduction of trading activity, implying reduced sales and revenues for most businesses (Assrfa
and Rao, 2020). On the other hand, companies that had been poised to benefit from a lockdown
situation increased their earnings or diversified their portfolios to enable their survival during
difficult times (Hedaux, 2020). The impact on businesses that had grown their resources before
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the lockdown period may be considered less than the impact felt by companies that ran purely on
the technical profit-loss balance (Anshika and Banerjee, 2020). It is likely that the losses
experienced during the COVID – 19 pandemic run over into subsequent years. Like the global
financial crisis of 2008, the shocks of this pandemic will be felt severely by small and medium-
sized businesses in the UK.

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 Research Rationale
The UK hosts thousands of SMEs, which previously enjoyed a thriving economic and political
environment favored by the country's economic and trade policies. These businesses contribute
towards the positive economic and social welfare of thousands of citizens in the country. This
includes the consumers whose needs are satisfied by these businesses, employees whose wages
and livelihood rely on the companies, and other stakeholders, including shareholders and
business owners whose requirements depend on SMEs' profitability in the economy. This also
trickles down to inflation rates in the UK, given that the Brexit referendum and the uncertainties
surrounding the situation had already destabilized the business environment in the UK (Bloom et
al., 2018). The profitability of each business contributes to the performance of each economic
sector in the country.
Research Questions
1. What are the short-term financial impacts of the COVID – 19 pandemic on businesses in

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the UK?

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2. What are the short-term social impacts of the COVID – 19 pandemic on businesses in the

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UK?

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In this study, short-term refers to the twelve months between January 2020 and December 2020.
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Note that the pandemic was declared in March 2020, but the effects of COVID – 19 were felt
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since the beginning of the year.
Research Aim
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This study aims to identify and demystify the financial and social impacts of COVID – 19 on
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small and medium-sized businesses in the UK between January 2020 and December 2020. This
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information is crucial to a financial advisor in assisting companies to regain their stamina after
the pandemic. The study's findings will be useful for future academic research, opening up the
topic for further investigation.
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Hypothesis
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H10: There are no short-term financial impacts of the COVID – 19 pandemic on SMEs in the
UK.
H20: There are no short-term social impacts of the COVID – 19 pandemic on SMEs in the UK.
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H1A: Short term financial impacts of the COVID – 19 pandemic on SMEs in the UK include
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inadequacy of resources to fund daily operations, high cost of credit, and low sales revenue.
H2A: Short term financial impacts of COVID – 19 pandemic on SMEs in the UK include
changes in interpersonal interaction, cautious social interactions, and the social difficulties of
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personal customer service.

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 Data and Methods
This section underlines how the proposed study will answer the research questions outlined in
the previous section. It details an appropriation of the research paradigm, research design,
sampling methods proposed for the study, data collection methods and instruments, the suggested
data analysis methods, and ethical considerations of the methodology.
Ontological and Epistemological Orientation
Epistemologically, the proposed study takes a pragmatic approach, an intersection of
interpretivism and positivism (Simpson, 2017; Rehman and Alharthi, 2016). The researcher
believes in objective reality (or multiple objective realities) in the world (Al-Ababneh, 2020). It
is possible to explore these realities objectively through scientific methods. Additionally, the
researcher's knowledge and point of view are involved in the research to provide individual
interpretations of the facts that exist in the world (Shah, Shah, and Khaskelly, 2018). To some
extent, this research will involve objective understanding of information and the use of

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subjective information and meanings to provide a complete picture of the effects of the COVID –

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19 pandemic on SMEs in the UK. The chosen views are meant to give the best and most

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comprehensive answer to each research question in the study.

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Research Design
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The study takes an exploratory research design with a mixed-methods approach. Exploratory
research design is used to investigate a current research issue that is not defined clearly or is in
its preliminary stages (Swedberg, 2018). The design is suitable for an existing problem that is
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mostly undefined (Creswell and Creswell, 2017). This study begins this exploration with a
general idea of the impacts of the COVID – 19 pandemic on SMEs in the UK. The effects are
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then broken down into financial and social effects. Notably, the study's findings will only
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identify financial and social impacts, but they will not provide conclusive results. As such, this
study will lay the ground for more conclusive research in the future, as is the nature of
exploratory research.
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This research design is chosen based on the recency of the COVID – 19 pandemic and the
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resultant issues that affect businesses in the UK. This choice is also considering that the
pandemic and its impacts are a unique phenomenon that has not been experienced before.
Notably, academic interests have published a wide variety of resources and literature on the
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pandemic and its impacts on businesses. However, most of the information that will be gathered
online has been published in the past year.
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Sampling
Purposive sampling is suggested for this study, as it is possible to intentionally reach the
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proposed sample (Etikan, Musa, and Alkassim, 2016). The suggested sample comprises SMEs in
the UK whose financial reports for the 2019 and 2020 financial periods can be accessed online
for free. These companies also need to have published at least one press statement, blog, or
featured in a news article on a reputable mainstream media. A sample of 20 SMEs drawn from
each of the UK's regions: Scotland, England, Northern Ireland, and Wales; is suggested. Five
SMEs from each region will be included in the sample.

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 Inclusion Criteria
 SME registered in the UK
 Financial records, CSR reports, and sustainability reports for 2019 and 2020 available
freely online.
 The business has published at least one qualitative piece of information regarding
COVID – 19 online impacts.
Exclusion Criteria
 Large Multinational Corporations in the UK

Data Collection
A mixed-methods approach is proposed to take advantage of both qualitative and quantitative

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data for the study. A two-part study is proposed. The quantitative study will involve collecting

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financial information of the chosen SMEs in the UK for the 2019 and 2020 financial years.

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Comparison of these reports will reveal financial impacts on the businesses. Observations across

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financial reports will establish trends on the impacts on SMEs in the UK for possible

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generalization. The second part of the study will involve collecting qualitative data on the social
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impacts of COVID – 19 on SMEs in the UK. This will include blogs, news articles, newspaper
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articles, business magazine articles, and press releases made by SMEs on the social impacts of
COVID – 19. CSR and sustainability reports will also inform on the social impacts of COVID –
19 on the SMEs.
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Data Analysis
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Data from the quantitative study will be analyzed using statistical methods. Ms. Excel is
proposed for the analysis process. The analysis process involves extracting financial performance
indicators from financial records, tabulation this data, and establishing possible trends using
statistical methods.
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Data from the qualitative study will be analyzed using thematic content analysis. The analysis
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process will identify key issues by a thorough investigation of CSR and sustainability reports and
blogs, news articles, or press releases identified from online sources. The qualitative study results
will be used to explain or support the results of the quantitative study.
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Ethical Considerations
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1. All data collected for the study will be sourced from the public domain. This means that
only information published online for public use will generate findings for the study. As
such, consent of each of the chosen study subjects in the sample can be reasonably
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presumed.
2. All data collected will be used to inform this study only.
3. Anonymous identifiers will be used to define the SMEs in the sample before data
analysis. This will ensure anonymity in the data analysis and reporting processes,
ensuring that it is impossible to identify the participant SMEs in the study.

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 Limitations
This research will rely on data and information collected from online sources only. It is possible
that these sources may provide incomplete data on the impacts of COVID – 19 on SMEs in the
UK. As such, the researcher will undertake rigorous internet research to access the most detailed
and comprehensive information on the chosen businesses in 2020. This will include financial
reports, sustainability reports, and reports on corporate social responsibility. The research will
also access official press releases or blogs written by the businesses on the effect of COVID – 19
in the UK.
This research draws insights from historical data on how SMEs handle negative business
impacts. On the other hand, the research acknowledges the uniqueness of the COVID – 19
pandemic, the global lockdown situation, and the business effects that have resulted. As such,
some of the suggestions and recommendations put forward may be unique and lacking academic
backing.
The study only applies to SMEs in the UK. Any further generalization that may be achieved in

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the research process will not be intentional.

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Conclusions

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Investigating the financial and social impacts of the COVID – 19 pandemic on SMEs in the UK
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is paramount to informing the actors involved on the way forward past the pandemic. An
exploratory study using the mixed methods approach is proposed. The two-part study will
investigate the pandemic effects on SMEs using contrast data from the 2019 and 2020 years.
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Findings will indicate the short term effects of the COVID – 19 pandemic on small and medium-
sized businesses in the UK.
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