King's Business School said many of the UK's SMEs are in a "precarious" position, with 61% of the entrepreneurs it surveyed saying the existence of their business was under threat as a result of a significant decrease in trading.
Given the size of the UK small business population, which contributes 52% of the £2.2 trillion generated by the private sector and employs 60% of the private sector workforce, the research suggests that a total of 16.6 million jobs are at risk if entrepreneurs and business owners cannot sustain their company for the remainder of the pandemic.
More than 53% said they were likely run out of money within the next 12 months if the current situation continues. On the plus side, only 19% of SMEs had been forced to lay off staff - however, that figure is likely to increase significantly when the furlough scheme ends this week.
The study also found that women-led businesses were impacted more adversely than those of men, with 72% seeing their businesses experiencing lower trading volumes, compared with 56% of male-led businesses. However, female entrepreneurs were more likely to see existing business accelerate thank to moving online, with 16% of female entrepreneurs making the switch compared with just 7% of male entrepreneurs.
Professor Ute Stephan, who led the research, said: "While entrepreneurs were optimistic and could see possible long-term positive impacts on their businesses, it was also clear that many were in survival mode. In our sample alone, the jobs of 214 entrepreneurs and their 2,114 employees are potentially at risk.
"Entrepreneurs are agile, but there are only so many things they can do to keep their businesses afloat. With many parts of the country facing stricter lockdown, we urge the government to help SMEs find ways to adapt and to build on their potential to 'buld back better' as the backbone of a more inclusive and greener post-Covid UK economy."
Areas of improvement
Building on the insights of the survey, the researchers highlighted five areas of focus for the post-Covid economy, including targeted government support measures to help SMEs thrive.
Agility and resilience - Small cash grants or 'Covid Opportunity Vouchers' to encourage SMEs to conduct smart experiments to test potential new products and services. Recent loans and government grants may need to be extended, with consideration being given to repayment holidays until certain income thresholds are reached.
Digitisation - Designed to support greener ways of business and help address regional imbalances. However, new and simple solutions may be needed to help small businesses grappling with IT infrastructure and data security for the first time.
Global vs local supply chains - Some entrepreneurs had switched their supply chain to local providers, while others expanded into new product types. This suggests great potential to further develop the production capabilities of UK SMEs with an emphasis on reducing carbon and environmental footprint of their products.
Inclusive and social business models - The pandemic prompted a significant proportion of entrepreneurs to 'give back to society' through their businesses. There is potential to turn this spontaneous engagement into something more sustainable by making it an integral part of the business model.
Work-life balance and mental health - While entrepreneurs were recognising the benefits of remote working in terms of work-life balance, they were not yet addressing the issue of social isolation arising from it.