What will the SME market look like post COVID-19?
Back in January, the future seemed rosy for the country’s SMEs. The economy was looking strong, and the country had just elected a majority government.
Brexit worries still weighed heavy for some, but at least the uncertainty it brought appeared to have an end in sight.
Enter COVID-19 and everything changed in a heartbeat
A recent study by Bibby Financial Services (BFS) showed that a third of SMEs are likely to run out of cash by the end of July, even with the financial support schemes available. The issues that organisations face are wide-ranging. Managing cash flow is a key challenge, with the majority of companies seeing a huge drop off in revenues. Those that are fortunate enough to sell products that are in demand have faced disruption to their supply chains. And all office-based organisations have, almost overnight, had to deploy a home working strategy, whilst grappling with their responsibilities to their staff during these unprecedented times.
It’s no wonder that according to Opinium Research, over 80% of decision-makers in the UK’s SMEs are worried. Whilst still in the middle of the crisis, short-term impacts dominate the concerns. But two-fifths of small and medium businesses have longer-term worries about the wider long-term economic situation.
Is there light at the end of this long dark tunnel?
As we start to see a loosening of lockdown and the first moves to get people back to work, what does the future look like for our SMEs? They do, after all, represent 99.9% of the UK’s business population and employ over 16 million people, and so the success of the whole economy is very much dependent on them.
One thing the pandemic has highlighted is how innovative and resilient people can be. And despite everything, there is optimism. The BFS report suggests that, although worried, the majority of SMEs do expect to see growth in the future. But things won’t just go back to how they were. The ability to adapt is, in our opinion, what will separate those who recover from those who sadly don’t.
SMEs will need to respond with inventive and future-focused plans. Whilst it’s too early to really know that the SME landscape will look like, it is likely we’ll see some of the following developments:
- The wider adoption of a digital approach to business. Companies who had previously relied on footfall have managed to take their businesses online, sometimes in a matter of days. From boutiques developing an internet store to garden centres creating a click and collect service, those who previously saw no need for an online presence have now realised how it can be a central strategy for business survival.
- Stronger networks and partnerships. We’ve seen, for example, software companies partnering with hardware suppliers to create hand sanitising stations that display health and safety messages. Companies are likely to look at how they can work with others to enable them to adapt to changing circumstances and take advantage of new opportunities.
- A different approach to finance. Government support is a great short-term crutch, but longer-term, SMEs are likely to be looking for more flexible finance products to protect themselves in times of crisis and facilitate future growth and diversification.
- Investment in technology to support changing work cultures. One thing we’ve learned during this crisis is that office-based staff can successfully work from home. Whilst employees will return to the office, it’s likely that some type of hybrid model will be adopted by many, with technology allowing staff to work partly from home. This, in turn, will lead to a reduced need for large offices as a smaller physical space can be managed to accommodate fewer people in the workplace.
We’ve always been a nation of shop keepers, and it’s our SMEs that are the backbone of our economy. When global crises hit, the impact is huge and understandably devastating. But history shows the longer-term impact is often positive. We hope this is the case, with companies emerging more streamlined, more focused and more agile than ever before.
Are you an SME grappling with the impact of the pandemic? What measures are you taking to survive and what changes do you think you’ll make in the future. We’d love to hear your thoughts.
Nigel Chambers, Remus Rewards - email@example.com