The impact of COVID-19, and the way in which businesses have had to react and adapt, is driving long-term changes at small- and medium-sized companies (SMEs) in the UK, according to a new study by Santander Bank.
The study, which polled 2,050 senior leaders at UK SMEs, found that around a third of SMEs that had implemented changes planned to make these adaptations permanent post-pandemic.
Over half of the respondents (57 per cent) said that they had adapted or made changes to the way they do business as a result of COVID-19. The most common change was alternative opening hours, which had been implemented by 18 per cent of business leaders. Other common changes included moving business online (14 per cent) and changing the business’ products or services (13 per cent).
Among those that made changes, close to half not only survive the COVID-19 crisis, but grew their customer base during the pandemic. As a result, 32 per cent of those who had made changes said they would become permanent.
The study also found that SMEs had been quick to respond to the challenges posed by the pandemic, with over 70 per cent of those polled having made their changes either before or within a week of the UK’s lockdown being announced at the end of March. A third of these businesses credited their quick response to having a flexible workforce, while a further third said it was due to having a strong, supportive customer base.
Over half (51 per cent) of SMEs polled say they will completely re-think their long-term business strategy. 28 per cent plan to utilise online more, 29 per cent plan to have more staff working remotely, while 20 per cent plan to occupy less physical space. 16 per cent went as far as saying they would repurpose their business entirely.
Despite this, COVID-19 has of course had many negative effects for SMEs, with 36 per cent of those polled saying that they would not be prepared for facing other challenges or crises until COVID-19 had been fully dealt with.
The crisis saw 58 per cent of SME leaders in the survey report a decline in revenue and profits, while close to one in ten respondents said they furloughed all of their staff during lockdown.
Looking to the future, just 19 per cent say they expect their business to return to pre-COVID levels this year, with 32 per cent expecting a return to normal levels by July 2021. 60 per cent report being concerned about whether they will be able to attract customers back. 18 per cent are concerned about the marketing investment required to restore customer spending.
Regional differences were also pronounced among respondents: one in ten West Midlands businesses polled do not expect to ever return to pre-pandemic levels, compared to 36 per cent of businesses from Northern Ireland who expect to return to normal this year.
However, in spite of such worries among business leaders, a separate Santander study conducted among 2,000 UK customers found that the efforts made by SMEs are being appreciated. 77 per cent felt that COVID-19 had shown that the UK would be worse off without SMEs, while 60 per cent recommend that their local SMEs make the changes they’ve enacted during the pandemic permanent.
Susan Davies of Santander Business Banking writes: “One thing that is clear is that for many people, SMEs are the backbone of the UK economy, and now more than ever, are proving to be invaluable to the local communities in which they serve.”
For more on how UK SMEs are responding to the COVID-19 crisis, check out this recent insight:
Confidence strong among UK SMEs, studies suggest.
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