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Insights

Has coronavirus made UK SMEs more resilient?

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Is it possible that whilst challenging, the coronavirus pandemic has been a needed catalyst for change for many SMEs? Our latest research explores the areas in which SME decision makers have seen this evolution take place across their companies and how it might underpin businesses as we enter the second phase of the pandemic.

Despite the challenges presented for SMEs over the past few months, results show that it has been a constructive period for some, as a fifth (18%) say COVID-19 has in fact had a positive impact on customer demand and 16% say it has had a positive impact on productivity. Overall, 15% of SMEs stated that they were faring better as a result of the pandemic.

SME decision makers say employee working arrangements have improved, with nearly half (48%) seeing more productive ways of working adopted and with both home working and flexible hours being ingrained in the ways in which businesses operate. Half stated that there was no impact on recruitment and this was notably higher among smaller businesses.

Results show that businesses have implemented numerous changes to get through the pandemic, including reducing costs (34%), targeting new customers (33%) and increasing customer communication (30%). For the majority, these changes are permanent with 73% keeping costs reduced and 70% continuing to target new customers and communicate with customers more.

Interestingly, 19% of SMEs introduced new products or services, and 18% of these stated it would be a permanent change. Online distribution also saw an increase, with 21% starting to offer products or services online as a result.

The evolution of customer bases during the pandemic has seen region, profile and type of customer changing for many businesses. Over a third of companies (34%) that had previously sold direct to consumers have adapted so that they now also offer products and services to business customers. Conversely, a quarter of companies (24%) that predominantly have small businesses as customers have experienced more sales to consumers.

In addition, two in five (42%) businesses say their business is now more localised, whereas 45% have increased their geographical reach.

Despite the positive steps businesses are taking to become more resilient, the impact of coronavirus has clearly been felt by many. SMEs owners did report turnover (66%) and cash flow (60%) to have been the most negatively impacted by the pandemic, followed by customer demand (58%) and employee morale (56%).

Regardless of these challenges, many SMEs have used this time as an opportunity to move towards a stronger and more successful future.

Read the full report here.