Business in Lockdown: 'I was always lucky but now my savings are gone'
England's business heartland is in the depths of its third lockdown of the pandemic and the outlook is bleak for the country’s smaller companies.
On Friday it was announced British retail sales suffered the largest annual fall in history in 2020 – dropping 1.9 per cent from 2019. Without a boost to government support schemes at least 250,000 of the 5.9 million small companies in the UK are set to close in 2021, according to the Federation of Small Businesses.
Entrepreneurs are hoping for relief from a £3bn scheme to help a million small business owners who pay themselves through dividends rather than salaries. A proposed Directors Income Support Scheme would pay sole directors up to 80 per cent of lost profits for three months, up to a ceiling of £7,500, offering a small boost for entrepreneurs, who have so far received nothing.
“Almost a year of disrupted demand and extensive restrictions to company operations is taking its toll. Staff morale has taken a hit. And business resilience has hit a sobering new low,” said Tony Danker, CBI director-general.
With a whole class of business owner/manager staring at the abyss, three small business owners have told The National about the strategies they have put in place to survive.
London restaurant owner: ‘I’ve gone from a £4m annual turnover to barely making £400,000’
For London restaurant owner Ibrahim Dogus, 40, the third lockdown blended into the series of restrictions his business has already faced since the pandemic started last year.
Mr Dogus owns three restaurants dotted around the London Eye in central London: kebab eatery Troia Southbank, Italian restaurant La Cucina di Mamma and grill house Westminster Kitchen.
Their locations in the heart of Waterloo meant all three restaurants were busy, filled with office workers throughout the year and boosted further by tourists during the summer.
Until February last year he was proudly running a business with a £4 million turnover, but he expects his 2020 takings to barely make 10 per cent of that.
“I’ll be surprised if we hit £400,000. It was a terrible year which hopefully we’ll never repeat but we didn’t start 2021 in good shape either,” said Mr Dogus, who once ran as an MP and runs the British Kebab Awards.
“Until February last year, everything was perfect. I started my business in 2004 with a small unit and grew from there and then last year it fell off a cliff.”
While restaurants were closed during the first lockdown last spring, Mr Dogus said the summer respite, when restrictions were eased, made little difference because Covid was still around.
“Our business continued to struggle, because many offices were still closed and tourists were no longer visiting central London,” he said. “It had become a ghost town.”
Despite a little boost in August from Rishi Sunak’s Eat Out to Help Out campaign, Mr Dogus said his restaurants barely achieved 20 per cent of their normal trade.
He was then forced to shut up shop again in November as the rising number of cases triggered another lockdown in England, and despite ordering in supplies for a Christmas push, he had to throw away food when London was plunged into Tier 4 restrictions in December.
Even takeaway sales have done little to boost his revenue.
Of his original staff of 60, half have now left the country and 30 remain on furlough, including Mr Dogus himself.
He hopes Mr Sunak’s plan to offer support to directors will be approved so that he can claim more income to pay his bills as he is currently surviving “on very little”.
“All we can do is make sure we are still there at the end of this,” said Mr Dogus. “We’ve been lucky because we’ve always been busy so we had savings for a rainy day but all those savings are gone now.”
While Mr Dogus says business rates relief has helped, he still owes rent to his landlords and has debts with other suppliers because he has no income coming in at all.
There are also utility bills to pay, as well as other costs, such as licences and business insurance.
Four months ago, the company secured a £50,000 bounce back loan from the government that Mr Dogus used to pay off suppliers.
“We’re trying to pay as many as possible so at least they can carry on their business,” he said.
Born in the Kurdish region of Turkey, Mr Dogus moved to the UK in 1994 after his father was granted refugee status in the country.
Mr Dogus, a father of two with another on the way, said nobody was prepared for this and he is now hoping things will return to some semblance of normality in April.
“While I do see light at the end, none of us know how much longer we will have to struggle and whether we will be able to keep going,” he said.
“It’s a worrying time health-wise and for my kids, business and family but we’ve got to be strong.”
Ipswich boutique owner: ‘Focusing on online sales ensured we didn’t do too badly’
The first lockdown came as a shock for boutique owner Mandy Errington, who set up DJV Boutique in 2012 in Ipswich, Suffolk. The store sells French Connection collections as well as other niche brands, a vegan beauty line, handbags and accessories.
Ms Errington had been proud that her independent business could offer customers that personal touch, with staff able to spend time with them.
So, when the country plunged into its first nationwide lockdown last spring, she felt she did not have enough time to prepare.
“It was a shock because we didn't know what to expect at that time and how long-term it was going to be,” she said.
Ms Errington switched her focus to her online offering, which at the time accounted for about 30 per cent of revenue.
“We traded online quite gingerly at first because I was due to get a lot more stock in but then the brakes were put on because we thought ‘Oh, this has happened’,” she said.
She gradually built up the online business, introducing some new services to stimulate sales, such as virtual tours around the shop and tailored searches for people looking for a particular item.
“You don't even have to search online. So some gents ring us up and say they have £100 pounds to spend and want a dress and a scarf, then I put something together for them to give people a break from trawling through websites,” said Ms Errington.
The move worked, with her online sales increasing. Then when the store reopened in June after the first lockdown, pent-up demand caused a surge in sales.
“People felt hemmed in a little bit from the lockdown, so we were surprisingly busy,” she said.
“We set it up really meticulously and didn't actually allow our customers to touch anything. We offered a service whereby they came in, and then we presented what they wanted to look at. It gave them that little bit more reassurance that we were keeping everybody safe.”
However, Ms Errington did not neglect her growing number of online customers and sales during the second national lockdown in November held up despite the shop being closed once again.
Despite Covid, Ms Errington said 2020 was actually a prosperous year for her business, with her online customer base making up 50 per cent of her sales in December.
“Considering the situation, we didn’t do too badly last year,” she said. “June was a good month and in November there was a definite spike online while the rest of the year has been pretty average. I thought we’d be worse off.”
When England was plunged into lockdown for a third time, Ms Errington was ready.
“I could just tell it was going to happen, so it wasn’t a shock this time and we were far more prepared,” she said.
While she decided against offering ‘click and collect’ for customers to reduce contact and protect against spreading the virus, she once again ramped up her online offering.
To develop new ways of doing business, Ms Errington has attended webinars and listened to podcasts to tailor her offering to a new audience.
“We’ve found our own way and we’ve stabilised and I’ve plugged the holes in the right places and secured the business as much as we can,” she said.
Cranleigh ice-cream shop owner: ‘We shut up shop when my wife and I caught Covid’
Opening an ice cream shop in the middle of a pandemic might seem a risky business plan, but for Mike Carter, co-founder of Moooh!, an independent ice cream brand in Cranleigh, Surrey, the move quickly paid off.
In August, the family-run company made a more than 600 per cent increase in sales when it opened its first physical store in the village, compared with the previous month when it was only operating out of a Citroen H van.
Mr Carter, 59, and his wife Amanda, 58, decided to set up an ice cream business in 2015 after visiting a food festival and spying a van selling ice creams.
Their set up costs of £30,000 included sourcing and converting the van and Mr Cater, a freelance development chef for small food manufacturers, started creating recipes for Moooh!.
Using their adult daughters’ social media skills, they began promoting the company and attending parties, weddings and village fetes on weekends.
“The great thing was that all the events were annual, so we had the repeat business and then it just grew on from there,” he said.
When the pandemic hit and Mr Carter’s freelance work disappeared, he decided to spend more time on Moooh! and open a physical shop in the heart of Cranleigh in a unit once used for the same purpose in 1904.
Mr Carter, a father of three and third generation Cranleigh resident, said his mother can remember being taken to the ice-cream shop with her brother by their grandparents
“Commercially it stacked up because the best thing about ice cream is there's no wastage because it's frozen and the shelf life is really long,” he said.
“Because of the pandemic, I was able to lock myself away in the office at home and muster all the equipment for the shop, such as a display freezer and a chiller. I managed to get everything delivered in the last weekend of July and we opened on August 1.”
The opening month proved very lucrative with the company trading out of the shop and the van, which was parked next to the store on common land.
“We were flying,” said Mr Carter.
However, as the number of coronavirus cases escalated around the country, the family caught Covid in November, putting Ms Carter in intensive care and forcing the closure of the shop.
“My wife was in hospital for six days and with myself and my two daughters also positive, it took a month before we were able to open again,” said Mr Carter.
“There were no sales but because we were in lockdown we didn’t miss out too much.”
Once the family recovered, the shop reopened in December, cashing in on Christmas orders with customers snapping up their winter menu of waffles, doughnuts and hot chocolate.
So, when news of the third lockdown came, Mr Carter made an unusual decision. Despite being able to stay open because Moooh! is a food outlet, he decided to close the store and only offer deliveries to reduce the risk of spreading the virus.
“I could see the cases escalating and I thought even if people behave themselves in the shop and we were only letting in one family at a time, it’s such a small space that it could be a Covid brewing pot,” he said.
“We’d had such a torrid time with Amanda’s hospitalisation and I could not live with myself for creating an environment that could possibly be a source. I felt it was the safest thing for the community because I did not do anything to encourage them to come out. The message was loud and clear – stay in.”
Mr Carter said a government bounce-back loan helped to cover his £16,000 set-up budget for the store and six months of his living costs.
What also saved the business, he said, was that his business plan had already budgeted for a lean January, February and March, because it is an ice-cream business.
The company will rely on home deliveries for now, with ice cream delivered in biodegradable thermal containers that hold eight to 10 scoops.
“I’m ticking along and the brand will stay alive,” Mr Cater said. “Last Saturday we did about 23 deliveries and the average spend is £14.
“I’m optimistic about the future. The pandemic has made us think outside the box. It’s drawing on all my creativity and in a way it’s quite enjoyable because it’s a challenge.”
Updated: January 23, 2021 12:26 AM