Back to small business
With everything that small businesses have been through over the past year, it’s important to be ready for what lies ahead. But now that the UK government’s roadmap has been set out before us, and with ongoing vaccinations signalling light at the end of the tunnel, SMEs across the UK can finally plan for the future – and that’s exactly what they’re doing.
According to Barclaycard’s latest SME Barometer, a quarter of UK small businesses claim that their output has already surpassed, or returned to, the pre-pandemic levels first seen at the start of 2020 – with a predicted growth rate of 8.1 per cent for 2021. This is no small achievement. From the very first lockdown and through enduring times of uncertainty, SMEs continue to show incredible resilience – harnessing their creativity to relaunch their offerings for a new, at-home audience and showing support to the people and communities they serve. From builders to baristas and everywhere in between, we can’t help but be impressed by their indomitable spirit.
As Britain prepares to open up safely, what does the future hold for our independent businesses? According to Barclaycard’s Barometer, four in ten (42 per cent) SMEs believe the current national lockdown will be our last, and 70 per cent feel hopeful about what comes next. Business sentiment is starting to look more positive, at 98 points out of a possible 200 (the highest level since the start of the pandemic) but just how carefully should SMEs tread as we set foot on this new landscape? What positive learnings can we carry forward with us?
1. Things won’t be “back to normal” straight away
It’s important for SMEs to remain vigilant, hope for the best, and plan for the worst – an approach that many of us learned in 2020. As lockdown restrictions begin to lift, it would be easy for businesses and customers alike to assume that things go back to pre-pandemic “normality”. The reality is that this may take some time – with many businesses perhaps not going back to looking exactly as they did before.
Barclaycard’s research reveals that small business owners are planning for all eventualities with cautious optimism, with three in ten (32 per cent) saying they are prepared for the end of national lockdown measures. Short-term losses will be inevitable for many, with a further 7.5 per cent dip in revenue expected to impact businesses over the first three months of the year as they await the green light to open their doors. But there is plenty for business owners to be doing in the meantime, to make sure they are able to open to the most favourable conditions possible.
2. It’s time to lean into digital transformation
In many ways, the pandemic has changed the way we do business forever – from more contactless payments to fewer handshakes! Digitalisation was already on the agenda for many, and the arrival of COVID-19 caused businesses of all sizes to radically overhaul their strategies to make sure digital capability is at the top of the agenda.
With the majority of SMEs unable to serve customers face-to-face in a traditional sense, many have been quick to respond by making the move online – even if that meant simply taking orders via social media. Now SMEs are turning their attention to what comes next, looking outwards for people with the tech skills to take their businesses forward, as well as inwards at investment in the technologies and platforms they need in place to drive growth.
Businesses increased their investment in technology to stay operational during the pandemic and remain committed to this investment even after lockdown ends. In Q4 2020, half (50 per cent) of SMEs said they invested in digital upskilling for themselves or their staff, and in Q1 nearly a quarter (24 per cent) plan to continue this investment even if restrictions ease, while a further 23 per cent also intend to continue increasing activity on social media (23 per cent).
Nearly three in ten (29 per cent) SMEs say they will invest in new equipment and technology in 2021, and many view technology as the top opportunity for growth over the next year (13 per cent).
3. We are the architects of a new world of work
Small businesses are optimistic about their employment ability as lockdown eases. Three in 10 (30 per cent) SMEs expect the number of full-time employees they have to increase over the course of 2021 – a metric that has promisingly held steady from Q4 predictions (also 30 per cent).
Since the start of the pandemic, a quarter (25 per cent) of SMEs say they have seen an increase in job applications with transport businesses seeing the largest rise (41 per cent). More than half (52 per cent) of SMEs in this industry believe that working for a smaller business, or working away from a city centre, is becoming more appealing to prospective candidates.
What’s more, once they bring their staff back to work after lockdown, 41 per cent of SMEs say they will continue to offer flexible working and don’t mind where their staff are based. Of those not asking for a return to the office, these changes have led to long-term mind-set shifts – with three in 10 (30 per cent) SME employers saying they no longer feel staff need to be on the premises to do a good job.
4. There are new opportunities all around us
Change brings opportunity – the opportunity to work with new people, sell new products, adopt new processes and enter new markets. If you look at it in this way, heading back into the real world can be incredibly exciting.
The other key aspect affecting SMEs is, of course, the UK’s departure from the European Union (EU), with international trade accounting for 23 per cent of SME revenue before the pandemic. With the UK now setting its own trade policy, small and medium businesses are looking for new global opportunities – with SMEs citing the most positive aspect of leaving the EU being the possibility of new trade deals in countries (19 per cent).
Reflecting on all the new opportunities that lie ahead for SMEs, our CEO Rob Cameron perfectly sums it up:
“While 2021 offers all of us hope for a national recovery, small businesses especially are looking forward to emerging from the uncertainty of coronavirus. SMEs have proven their agility, adapting quickly to get online, catering to a nation stuck at home and changing how their teams get the job done. While the world may be returning to some form of normal this year, small businesses have realised the benefits of flexible working and digital skills, with many already looking at what improvements they can take forward into 2021. As a banking and payments partner, we’re here to help our SME customers get online at this crucial time, and finance the changes they need to prepare for whatever comes next.”