While the pandemic is far from over, Sage believes that many small businesses are optimistic about the coming months. In some research published by Sage today, 78%% of SME’s across France, the US and the UK expect their businesses to be profitable by 2022.
A side benefit from the pandemic was that 52% of SME’s believe the pandemic has made them more resilient. An increase in efficiency and improving customer confidence levels have driven this SME optimism. In turn, the indication is that SMEs will start to recruit. Sage estimates that it will lead to job creation across the three countries, it forecasts:
- 2 million more jobs in the UK
- 4 million in France
- 6 million in the US
Is the SME optimism fragile?
It might be! When asked about the reasons for the renewed optimism, the three top answers were:
- The vaccine rollout programme (45%)
- Being able to see customers in person again (35%)
- Projections of increased consumer spending (32%).
In the US and UK, where the vaccination program is most advanced, confidence is highest, the US (82%), with the UK (79%) the lowest and an average of 81%. The difference may just be down to statistical anomaly or, more likely, a cultural difference with the UK more conservative in outlook generally.
The unknown factor is whether there will be another lockdown. A recent incident in Market Harborough shows how fragile the recovery is. A 16 years old party led to an increase in infection rate in the area by two and a half times. It seems likely that social distancing in some form at least is here to stay for some time. The 81% of SME’s that do not expect another lockdown may be optimistic though they expect business to return to pre-pandemic levels in the summer.
The Sage view
Steve Hare, CEO of Sage Group, commented: “As the economic environment improves, optimism amongst our customers is increasing and as is their confidence to capitalise on the opportunities ahead.
“SMEs are accelerating investment in people and digital technology, prioritising flexibility, resilience, and productivity. This is a clear sign they will bring the bounce back into the economy and why they need to be at the heart of any recovery plans.
Hare then acknowledged that the end of the tunnel might be in site but it is still difficult to tell how far there is to go. He added: “We must make sure this swell of optimism is given the opportunity to become a tidal wave of growth.
“At Sage, we have called on governments for support and investment to accelerate the recovery of SMEs during these difficult times and made our own investments in supporting an SME led recovery. We will make it our priority to continue listening, give unheard SMEs a voice with governments and use our time and expertise so that the economic recovery is an inclusive one.”
Sage identified three actions that SMEs took to help them through the pandemic.
- Relying on Savings (UK 25%, US 27%, France 21%)
- Cutting costs (UK 35%, US 38%, France 35%)
- and the implementation of Technology
Cutting costs may help in the long term as efficiencies are found. However, those costs will mount up again as SMEs recruit, if these are related to employees. Sage believes the real savings are through the implementation of technology.
76% of SMEs now rely on technology, and in 2020 most SMEs across the globe invested to improve their business. Across the UK (52%), France (67%) and the US (64%), technology was used to increase sales and to connect with customers.
Focus on the employee
It is not just the resilience of the organisations that has improved. SMEs are also looking to help increase the resilience and wellbeing of their employees. There has been a shift with mental health better acknowledged and understood across the globe. SMEs are looking to continue promoting wellbeing initiatives that were started during the pandemic. Key findings include:
- In the UK, 37% are looking to increase the physical wellness of employees
- In the US, 47% of SMEs will look at improving flexible working
Sage did not share the figures for other countries, but they are likely similar. Notably, Sage also called out that in France, 34% are looking to prioritise diversity as they start recruiting. It would be interesting to know if the results in the US and the UK were similar
Enterprise Times: What does this mean
The sentiment survey is a snapshot of opinion from SME’s. Sage did not share the sample size, but the survey was a follow up from The Survival, Resilience and Growth report completed in Summer 2020. There is no doubt that optimism is returning. The big question is on the timing of the return to business as usual. Just because everyone is vaccinated will not mean a return to normal. Businesses will need to continue with evolving business models. The impact of flexible working with more people working from home will impact many other SMEs. Café’s in business districts will see a drop in revenue from pre-pandemic levels. Those in residential areas may see an increase as people want to escape from home for a break.
Larger organisations are already making changes with Pret A Manger is opening outlets in Tesco stores as a trial. There are new opportunities for SME’s., Also, strong lessons learned during the adversity of COVID may see the economy bounce back in a healthier state than before. The reincarnated SME’s will rely on technology more and may need to provide a more caring and flexible environment for their workers.