By Tim Vine, Head of International Finance & Risk Solutions at Dun & Bradstreet
It’s fair to say that small and medium sized businesses – just like everyone else in the world – have had it rough recently.
COVID-19 has done more than rock the boat. It’s completely capsized it, leaving businesses to tread water the best they can. In a world where high streets are barren and shops needed to close their doors to the public, merely surviving has become the sole objective for many.
But the pandemic isn’t the only difficultly SMEs have recently faced. The uncertainty of Brexit is also casting its shadow over the future. The combined threat of COVID and Brexit has resulted in a disruptive 2020 and an equally challenging 2021.
In fact, research commissioned by Dun & Bradstreet found that half of SMEs (51%) believe they will suffer the effects of COVID-19 even more acutely in 2021.
The research, which included a survey of 750 SMEs, found more than half (54%) say the impact of COVID-19 has made them less confident their business will be successful, with 56% saying that the pandemic has made it difficult for them to plan for the future. While UK SMEs have received over £46billion through the Bounce Back Loan Scheme, those loans will still need to be paid back.
The impact of Brexit seems similarly as disruptive. Exactly half of those surveyed say they are less confident in the success of their business due to Brexit, as they attempt to unravel what the terms of a new trade agreement will mean for how they operate. A further 51% also worry about their ability to attract talent in a post-Brexit world – which is understandable considering many are already facing a significant skills gap.
Yes, the numbers paint a troubling picture. However, it’s not all doom and gloom. Despite the uncertainty, many businesses are using the disruption as a chance to rethink their business and grab new opportunities.
So with that being said, let’s examine some of the ways businesses are managing to innovate.
Pressure is the ultimate driver of innovation, and that has certainly been true lately. Dun & Bradstreet’s research shows 51% of SMEs have introduced new services as a direct result of the pandemic.
These new services have seized the opportunity to utilise new ways of doing business. Delivery services, kerbside pickup, and other online options have emerged and aided SME survival, and in some cases given them the ability to thrive. Businesses that have adapted have gained a huge amount of resilience, and will have newfound capacity to evolve in uncertain times.
Not only that, but many services will likely be relevant after the pandemic, giving them an advantage over the competition even when the world settles down.
Another area of opportunity is the more sophisticated use of data. During disruptive times it’s critical businesses make the right decisions. Data is an incredibly useful tool for gaining new insights and ensuring decisions are as well-informed as possible.
For example, there are risks associated when identifying new business partners, and relying on personal references might not be enough. Using data to fully understand the financial situation of business partners, suppliers, and even customers helps businesses mitigate risk and pre-empt any roadblocks further down the road – late payments for example, which is something that can be hugely impactful on UK SMEs.
Taking the point more broadly, data can help SMEs regarding their customers, competitor analysis, and the identification of potential business risks. Whatever the decision, a strategy backed with data brings much needed clarity to an uncertain world.
Turning to technology
A final area of opportunity is the use of technology. This feeds back into the first point about launching new services, because in many cases it’s technology which allows SMEs to do so. Going back to the Dun & Bradstreet report, 50% of businesses have pivoted to home delivery over lockdown – something that would not be possible in many cases without technology.
There’s also a huge armoury of operational and transactional technologies which are being quickly embraced. Over half (52%) of SMBs have started taking online payments for the first time over lockdown, and the accelerated adoption of cloud shows that businesses are quickly becoming more tech savvy.
Once again, the benefits of tech adoption are twofold. In the short term, it builds resilience – something which is critical right now. But in the long term, it gives SMEs the tools to hit the ground running when the pandemic ends and build a competitive advantage.
COVID-19 has undoubtedly been terrible for everyone. But for small businesses there is a silver lining. The use of data, adoption of technology, and newfound confidence in launching new services are all bright spots; embers among the ashes of 2020. Small businesses would do well to blow on them now to help spark a more prosperous future.