Decreasing turnover highest since April 2020

ended 20. January 2022

In December 2021, according to HMRC, a net 6% of firms reported decreasing turnover compared with the previous month; this is the highest proportion reporting a fall in monthly turnover since April 2020. We asked small businesses for their views.

16 responses from the Newspage community

Star Quote
"December was certainly a tough month for the travel sector. The introduction of yet another round of restrictions created even more uncertainty and we saw a distinct drop in enquiries early on in the month. As more real-world data emerged about Omicron, confidence started to return and we are very pleased to be seeing a strong rebound in January."
Star Quote
"The news of a fall in monthly turnover comes as no shock or surprise. Inflation, creeping interest rates, supply chain issues, the Omicron variant and Brexit all serve to hamper the growth and recovery of SMEs. On top of all of this, with Government support schemes nearing their end and repayment of loans now due, the pressure on businesses to keep on top of their cashflow without a steady stream of income is no doubt challenging. Continued financial support for British businesses is essential to get our recovery back on track."
Star Quote
"This data is absolutely no surprise to me or the thousands in the beauty industry. No-shows due to Covid restrictions and Christmas party cancellations were devastating for us. With such a high amount of people in the personal care sector being self-employed, our wages depend on customers showing up for their appointments. My profit for December 2021 was £48. January is looking even worse, but our Government only appears capable of helping out the hospitality sector."
Star Quote
"It doesn't surprise me at all that turnover was down across the board. I certainly felt the pain with sales over 30% down compared to the previous year. All Omnicrom's fault? I don't think so. I blame rising inflation, the rising cost of living, uncertainty in the market and consumers watching every penny. Oh and a government that offers no reassurance."
Star Quote
"We sell to schools and have had many conversations, meetings and demonstrations cancelled or delayed. One school cancelled 5 times due to staff shortages. Consequently our revenue has stalled and we cannot see it picking up for months. Schools are swamped and are telling us of 10% to 25% staff absences. School budgets are decimated by the cost of supply staff and cannot afford to go ahead with our product. Covid is killing us."
Star Quote
"I can completely relate to this. My turnover dropped by 30% from November to December. This is a huge amount for a small business and, coupled with VAT bills, it's no surprise many businesses are starting to struggle significantly with cash flow to keep moving forward. I fear unemployment rates will soon be on the rise as businesses try to find a balance and those that can’t will have to close. Many small business owners are already taking home less than the living minimum wage to keep their business open."
"Interest rates rising, inflation at record highs, skyrocketing energy costs and tax rises due - is it surprising that consumers and businesses are being cautious with their cash?"
'This doesn't surprise me. Every time we have further restrictions it reduces income for a lot of companies, I can imagine most opting to shop online rather than in person. December is stereotypically a quiet month for us as a company but last month was our busiest yet."
"December was a record month for us, bucking that trend. We achieved the whole of November's revenue by the 13th of Dec. I assume that's indicative of the shift to spending online while the restrictions and uncertainty were hammering the high street, travel and hospitality sectors."
"My only surprise is that this figure isn't higher. Consumer confidence is at an all-time low following the restrictions implemented over the Christmas period. The time has come for the Government to stop interfering with our livelihoods and let our businesses flourish."
"It's not surprising a large number firms reported a monthly turnover drop in December. Many of our clients like restaurants and bars reported a huge number of cancellations. This doesn't just affect hospitality, it ripples right through supply chains to wholesalers, manufacturers, retail footfall and supplementary service providers like taxis. Let's hope this is finally the end of restrictions."
"Omicron undoubtedly had a huge affect on footfall and hospitality in the run up to Christmas. But this decrease also points to consumers reining in spend, spooked by sharp rises in prices for food, fuel and other basic living expenses. It could be a portent of worse things to come, with energy prices set to soar in April just as Rishi Sunak's national insurance hike kicks in."
The decrease in turnover is no surprise as the Office For National Statistics also reported that December 2021 was the highest figure of workers off sick due to COVID-19 since comparable estimates began in June 2020. The latest COVID strain may bring milder medical symptoms, but the economic symptoms are as destructive as ever.
We saw this across a variety of sectors with our clients suffering. It's a real challenge given the narrative around inflation and restrictions in December, with the Government not laying out an organised and congruent plan to help forecast the future and increase consumer confidence. The lack of any fixed decisions is not surprising, given they were probably still intoxicated from partying.
"The decrease in turnover for December was no surprise. With Omicron taking a grip, the consequence had to be less business activity with both customers and staff being affected in greater numbers. This has carried over into January with the green shoots of activity only just revealing themselves. On the upside, we are expecting new growth in addition to the return of long-established customers reflecting an increasing number of people's reaction to the pandemic to buy time."
While Omicron undoubtedly caused a decline in Christmas sales and celebrations, it did not completely ruin the holiday. Importantly, turnover figures are seasonally adjusted, meaning that they would not reflect the normal increase in sales that comes with the leadup to Christmas. The non-seasonally adjusted figures show that turnover did indeed increase in December 2021, although by less than in previous years, indicating that Omicron impacted business turnover. Industry-level data shows that while manufacturing was up, accommodation & food services and retail firms reported net declines in turnover. This data is unsurprising; given the increased infectiousness of Omicron, consumers may have voluntarily avoided these sectors, which often involve a large amount of in-person interaction, especially in the post-Christmas period, when cases were reaching their peak.