Self-employed hit harder financially than employed during pandemic

ended 13. September 2021

New data published this morning by the Office for National Statistics shows that the self-employed were hit far harder financially than the employed during the pandemic. Key points:

  • The self-employed were less able to make ends meet than before the pandemic, unlike the population as a whole
  • Self-employed workers were more than twice as likely as employees to report borrowing money during the pandemic
  • Over a third (34%) of self-employed people reported reduced income compared to just 10% of employees

Reaction from self-employed small business owners and sole traders:

14 responses from the Newspage community

Star Quote
"The findings of this report don't come as a surprise. The pandemic certainly made me doubt my decision to work for myself when my order book was almost bare, and certainly in the first two weeks of lockdown when my pipeline disappeared completely. However, despite the lack of Government help (with the recent tax hikes a particular thorn in the side) I am back fighting twice as hard. I didn't become self employed believing I would be rich, as I probably earned more when I was employed, but for the freedom it provides. And despite the hell of the past 18 months or so, I'm still glad I made the choice."
Star Quote
"For a lot of the self-employed, including myself, the pandemic and everything that came with it really knocked the wind out of our sails. Many recently self-employed people, including myself, fell through the gaps of furlough and the self-employed income support schemes, based purely on the time they initially went self-employed, approximately 11 months before the first lockdown in my case. Necessity breeds innovation, though, and many self-employed people have come out the other side with far more robust businesses than what they went into this storm with. I often wonder if I’d have made as much progress with my mortgage advice business if I’d have qualified for thousands, or tens of thousands of pounds in support, as opposed to the £2.50 per month council tax reduction I found out that I could claim. Probably not. For me, it may have been a blessing in disguise as I adjusted my business’s marketing and haven’t looked back since."
Star Quote
"Being a limited company, I wasn't entitled to a penny of support and that hasn't changed to this day. No wonder the self-employed have been harder hit than the employed. It's definitely one of the reasons the recent tax hikes are particularly grating. I had £60k+ worth of client business booked for 2020, and almost overnight it turned to zero, with no sign of being able to replace it. Being in events and hospitality, it was inevitable I'd suffer after lockdown was announced, but I was shocked by the extent of the damage to my industry, and the difficulty I had turning my situation around. It's horrifying to spend four years building a business and have it disappear in a heartbeat. I slowly and painfully scraped my business back together, partly by expanding sectors, partly by teaming up with big agencies and other businesses."
"When the pandemic hit, I know I would have been one of hundreds of thousands of hospitality and event professionals wondering how on earth we could get through as a business, when our main trade was supporting clients for their live events, through corporate hospitality booking and venue and event support. My business of 5.5 years was in an extremely bleak position, with 90% of our trading arm going dark overnight, at least £70k worth of hospitality revenue refunded and other live events postponed or cancelled. However, we inadvertently created a new revenue stream in supporting our clients to run virtual events and entertainment. This new revenue stream definitely kept us afloat and now is running consistently alongside our other services that support the live event industry."
"HR and management training accounts for around 40% of our turnover. When the pandemic hit, our training pipeline vanished. We rapidly pivoted learning new skills, for example, I first delivered virtual training the day Boris announced lockdown. We have not yet returned to pre-lockdown volumes, but we continue to adapt both our offer and geographical reach. As a small business being nimble is essential, it's what makes SMEs the backbone of UK PLC."
"I started a business as the pandemic hit due to the opportunity I saw. While I worked for a very stable company who sold into private and public sectors, the lure of starting a business against such a hard backdrop was too tempting for me. Financially it's been very up and down. I resigned from a well paying and secure job so I knew it was going to be a struggle to keep my income at the same level as it was previously and, year on year, I'm around 40% less in terms of take-home pay. I have, however, been able to employ a team of seven on good wages who will drive the business forward so the short term sacrifices are balanced with the hope of a bright and well rewarded future."
"In March 2020 our business, a face-to-face training company, lost everything when Covid-19 hit. All bookings were cancelled and with no idea what was going to happen our clients couldn't rebook courses. We were left with massive overheads and a huge void of uncertainty, which continued for several months. Our business had reserves in it so we didn't take out loans but I personally lost a huge chunk of what I considered would be my pension. It was a terrifying period. "However, we turned everything into virtual training, persuaded our clients it would work and 18 months later we are back in profit and have opened up a whole new global product line. It will probably take a few years before we recoup our losses but we feel extremely positive that we are now in a strong position to weather whatever happens next."
"As an online-only business selling kids clothes, we actually benefited hugely from the pandemic and the resulting boom in online shopping when bricks and mortar shops closed. Our sales went crazy almost overnight between March-April 2020, our revenue doubled and then tripled through all three lockdowns and has stayed at that level ever since, which allowed us to invest, take on more staff and expand. Both myself and Nathalie, my co-owner, had corporate jobs, and ran Buildabundle on the side pre-Covid - the increase in sales due to lockdown allowed us both to leave our previous jobs to do this full time, which was certainly not on the cards before Covid. "It was a strange feeling, because we were acutely aware of how much so many other businesses were struggling, many of which were owned by our friends and family members. We felt very grateful to be in the position we were in, but at the same time almost a bit guilty to be benefiting from something others were losing from."
"When the pandemic first hit, we saw new business enquiries disappear overnight. We were fortunate that we had loyal clients, ongoing income and strong reserves. Hence we not only weathered that storm but were also able to invest in a new larger office to allow greater social distancing. "However, we saw fabulous well-established businesses, through no fault of their own, destroyed by the lockdown. But on the other side of the coin, we also have clients that set up craft supply businesses during the pandemic that boomed due to us all taking up lockdown hobbies."
"Refunding £500,000 worth of UK holidays during 2020 was horrendous, having worked so hard to grow the business. Forecasting how long we could survive without any income was harrowing, and the support for our business from the Government was minimal. "Financially, 2021 has been brighter than a UK summer as we have flown past pre-lockdown volumes with growth of over 95%. It seems the UK as a holiday destination will be de rigeur for at least another year. But we are acutely aware that the lure of foreign travel beckons as le soleil is guaranteed for les touristes."
"The pandemic has seen an array of consequences for our lifeblood businesses. Some have thrived, grown, emerged, struggled and also been distinguished. For businesses that were struggling ahead of the pandemic, this was the nail in the coffin, cue looking at our retail sector and those who hadn't got a handle on cash. It clearly had a huge impact on hospitality with some businesses being able to emerge as they 'pivoted' but others that couldn't were forced into locking down the hatches. We've seen lots of small businesses with reduced trading, actually making profits in excess of the previous year due to the support given by the government. As is always the story, there are winners and losers."
"The pandemic lockdown has forced a social and economic shift like the Industrial Revolution did, except the Industrial Revolution took 80 years. Some jobs won’t return, and others have had to shape-shift into totally new formats. We won’t ‘go back to normal’ in a pre-pandemic way, we are operating within what is now normal and that’s where we ought to be focusing our attentions. "Our agency weathered the storm in 2020, found its feet again in 2021 and we continue to diversify our offering and look out for new opportunities to ensure our continued healthy survival. The recently announced tax hikes are like being sucker punched at a time when we’re all picking ourselves up and dusting ourselves off, so we’re prepping for the marathon ahead. We’re battle weary, but we’re still here"
Early on, I took advantage of the first two SEISS Grants and these helped me stay afloat. Those rocky early days when no-one really knew what was going on were tough. However, as more people were furloughed or decided to turn their own side hustle into a full-time job, I progressively got busier. By the end of the last financial year I had my best year yet. That surge to self-employment sees no sign of slowing and I am now in the process of employing my first staff member to keep up with demand. The uncertainty at the start of the pandemic meant running a small business was a little scary. However, it has now became apparent that being a sole trader in the tech industry was probably the best place to be! I am optimistic about my future and that of the other small businesses that I support.
Lena Patel
I am one of the lucky ones, I have managed to keep afloat and at the same time had the privilege of supporting clients through these challenging times. I was one of the Limited Company Directors who fell through the net and didn't qualify for any government support. What I was able to do was support my clients to make life changing decisions regarding their finances and in turn started to receive more client referrals. I have recently moved into a new office in the local community and business is thriving. I've able to help more clients navigate early retirement which has helped increase revenue. I've also recently won a Women in Business award started a local networking group to support local businesses to grow in the new challenging times we find ourselves living in.