Small Business Britain reveals lessons on surviving a crisis for small businesses in a new report on ‘How To Be Resilient’ including Digital, Debt and Diversification.
Small Businesses
As the UK’s 5.8 million small businesses continue to face severe challenges over the winter, the report’s research, supported by TSB, found that over a third (37%) of small businesses have seen their revenues drop by more than half due to Covid-19. Despite this, over three quarters think their business will survive, with the majority among this (56%) feeling the weight of the obstacles but pressing on. According to a new report from Small Business Britain, small businesses were able to overcome the hit of the pandemic by implementing 3 key strategies. These include digitalisation of their companies, diversification of products and taking out emergency finance.
Digitalisation
Half of small firms survived 2020 by adding new technology (52%) as the workforce faced an unprecedented shift online. Digital has proven to be a key tool for survival, as well as future growth, with 59% of small businesses increasing digital skills and 50% adding new technology. Enhanced digital capability was found to not only aid business operations, but to boost confidence – over 70 % of business owners felt the digital changes they made would enhance their business over the longer-term.
Diversification
Almost half (44%) got through by pivoting and adding new revenue streams, a key way to be more resilient in the face of a challenge. “Finding a way to press on successfully is key to ensuring small business survival and enabling them to get past the period of crisis and into a more stable period of growth,” said Michelle Ovens CBE, founder of Small Business Britain.
Debt
Over half (53%) of small businesses accessed government financial support in order to survive. For a third of firms, Bounce Bank Loans acted as a critical lifeline, enabling them to continue. A quarter used these loans to pay urgent office costs and 18% used it to pay staff costs. Thirty percent of businesses saved the cash as a buffer for future needs, and over a fifth (22%) invested the finance into new growth opportunities.
“Whilst debt is not the ideal solution for many businesses, this provided a lifeline for some, enabling them to continue when there was little other option,” explains Michelle Ovens. “The extension of the Bounce Back loan scheme into 2021 has been welcomed, but small businesses are clear that there also needs to be an extension to the amount allowed and the period of payback to reflect that the crisis has continued far longer than was envisaged when the loans were first announced.”
