Embracing digital, diversifying products and accessing finance helping small firms during COVID-19

Embracing digital, diversifying products and services and accessing emergency finance were found to be the top ways small firms have survived the COVID-19 crisis so far, according to a new report from Small Business Britain.

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 56% ‘feeling the weight of the obstacles but pressing on’.

The ‘How to Be Resilient’ report, which sets out to understand the key factors contributing to business survival during the pandemic and share lessons for the future, found that over half (53%) of small firms accessed emergency Government financial support to survive. 52% also said they got through by introducing new technology, while 44% added new revenue streams.

Digital has proven to be a key tool for survival, as well as future growth, with 59% of small businesses increasing digital skills. Over 70% of business owners felt the digital changes they made would enhance their business over the longer-term.

“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.

“The crisis has been devastating for many firms, but those that have survived have used digital and diversification to their advantage, as well as drawing upon financial support, alongside other kinds of help from communities, peers, friends and family. While it is an experience no one would want to repeat, there are many lessons to be learned from this crisis. Businesses fearing for the future should remember it is not too late to adapt or to reach out. There is much that can be done, even in the bleakest of situations.”

A third of firms cited Bounce Bank Loans as a ‘lifeline’ enabling them to continue, with a quarter using it to pay urgent office costs and 18% using it to pay staff costs. 30% of businesses saved the cash as a buffer for future needs, and 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,” added 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.”

Adeel Hyder, business banking propositions director at TSB Bank, which supported the report, said:  “The pandemic delivered a shock to the economy like no other in living memory. The speed and scale of the Government’s response have been critical.

“As this report bears out – for most small businesses, access to Government support schemes like business rates relief, the furlough scheme and the Bounce Back Loan Scheme has been an important determinant of survival. As well as keeping a forensic eye on cash flow, riding new digital trends will be key to having a successful business in 2021.”

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