Small businesses likely to be hardest hit by the coronavirus, warns Ian Sandison of Cambridge BID
Ian Sandison, CEO of Cambridge BID, writes exclusively for the Cambridge Independent about how Covid-19 is impacting the city and the high street.
Small businesses are experiencing a particularly tough time at the moment.
Many bars, restaurants and independent retailers have sufficient cashflow to get them through just two or three months of these extreme trading conditions - if further restrictions are imposed by government then they’ll be forced to look at whether or not they can keep their doors open.
Loans are a traditional fallback that help bridge cashflow issues, but the uncertainties about future footfall and spending patterns make this a much more high-risk strategy than usual. Will enough revenue come in over the months ahead to pay off the amount borrowed? Nobody knows.
People are typically one of the main costs for a business. We are starting to see a reduction in staff hours as all businesses try to find ways to manage by minimising their overheads, which in turn has a negative impact on the income that employees can take home to their families.In the hospitality sector especially, these cutbacks could result in unskilled workers from the European Union moving back home to live with their families when travel restrictions allow.
They may not find it easy to return or they may choose not to do so, either of which could make it more difficult for local businesses to re-hire staff and get back on their feet. Proposed changes to the law, which would allow for temporary staff redundancies with Universal Credit covering wage costs, could benefit many of those affected.
The year-long business rates holiday for shops, cafés, leisure and hospitality firms, as announced in the recent budget, will also make a difference, though the sharp cut-off at £51,000 will be challenging for those unlucky enough to be just above the qualifying threshold.
Stock is another key overhead. Retailers order their stock up to six months in advance - and way before anything was known of Covid-19.Although some of this stock may not get made due to supply chain issues, in most cases it is hard to cancel deliveries and secure a refund at such a late stage.
The tap has turned off very quickly, giving businesses little opportunity to make contingency plans.
Larger businesses are also finding it tough: over the past year it’s been well documented that high streets across the country are showing signs of stress, with rent reductions and Company Voluntary Agreements (CVAs) becoming increasingly common. A challenging Spring/Summer trading period will only compound matters, and that will have a human impact in terms of job cuts and reductions in working hours.
The visitor economy and business tourism enable Cambridge, a city of only 120,000 residents, to punch above its weight in terms of its retail offer, to the extent that we’re regularly listed as a ‘top five’ shopping destination. But right now the whole city is very quiet, particularly in prime tourist hotspots such as King’s Parade.
A month ago local hotels had already processed over £1million in lost bookings, as cancellations began to come in around Chinese New Year. European travel company and international business group bookings then began to fall, and more recently individual consumers too have been impacted by international travel bans. Tourism-led organisations are predicting that revenue will be down as much as 70 per cent for the next quarter, with some companies forecasting a 75 per cent decline.
The impact is stark: it’s difficult for any sector to remain robust if half of their anticipated revenue is wiped out overnight or they are forced to close.
Aside from encouraging the people of Cambridge to support their local businesses as much as possible without compromising their own health, there isn’t a huge amount we can put in place now to mitigate the likely impact of social distancing on the business community. However, we are starting to plan now for recovery – and there are some obvious challenges and opportunities to consider.
Congestion and transport issues continue to hamper the high street. Online shopping will become even more of a mainstay for people over the weeks ahead, so we must tempt people back into the city by making it as easy as possible for them to travel once Covid-19 has run its course.
Recent news from Stagecoach about additional capacity on the guided busway is helpful, but we also need greater clarity as to whether the Greater Cambridge Partnership or the mayoral Combined Authority is leading on transport, and we need additional car parking capacity, quickly, in the Park & Rides. Not only would such actions help shoppers and leisure travellers, they would also make it easier for lower paid workers to access affordable transport from outlying villages.
I am concerned about the potential for future Extinction Rebellion activity to damage the city’s recovery.Many businesses I speak with agree that climate change is a priority now, and they are taking practical steps. They acknowledge that protestors feel the city is too slow in its response. However, I would ask those involved to find ways to work with the local authorities going forward, so that businesses and livelihoods aren’t further penalised through aggressive or intimidating actions. I ask Extinction Rebellion to lead by example in providing suggestions and ideas that will inspire people to change their behavior.
On a more positive note, we look forward to delivering the world-class Cows about Cambridge art trail, in partnership with Wild in Art and Break, when it’s appropriate to do so.
This will create a real feel-good factor in the city and will give local people the opportunity to enjoy colour and conversations on our streets. We still hope to screen Wimbledon outdoors near the railway station in CB1 again, enabling office workers and residents to enjoy an al fresco lunch and a chance to catch up with the sporting action. Our popular market square film screenings will continue once it is appropriate and, if we can deliver it, then our Independents’ Week in July, combined with our ‘hidden gems’ trails and videos, will highlight the character and diversity that our indie retailers bring to the city.
Finally, there is one thing everyone can do to support Cambridge businesses large and small over the weeks ahead. Buying a Love Cambridge Gift Card as a present for friends and family, or as a corporate gift, will store up spend that is local to Cambridge and help to reboot our economy as we come out the other side of Covid-19. Find out more at www.love-cambridgegiftcard.com.”