- 8 out of 10 businesses think they are handling challenges resulting from the Covid-19 pandemic well
- Yet 15% say they would not survive a second spike, while 1 in 2 SMEs are not confident they could survive a further -20% drop in revenue between now and September
- Investment incentives and further digitisation will support job creation - 40% believe that a technology grant from the Government would help them increase hiring
- Publication of Sage’s The Survival, Resilience and Growth Report follows the Summer Economic Update in which the Chancellor made for a strong summer of ‘bricks and burgers’ but the absence of a great digital led growth agenda was ‘a missed opportunity’ to accelerate a plan for all seasons
London, July 13, 2020 - Sage, the market leader in cloud business management solutions, today launches new research revealing 62% of small and medium sized enterprises (SMEs) have made or are planning to make redundancies following the Covid-19 pandemic. This equates to 1.4m jobs at risk if the Government fails to take decisive action now.
The Survival, Resilience and Growth report also revealed the economic recovery is likely to trigger a significant restructuring of the workforce where managerial roles and London jobs are the most at risk. It maps out sectors and regions that are most resilient, at risk or likely to grow.
Despite the stark outlook, Sage’s report revealed that British SMEs are bullish about the future, making bold moves to improve processes and productivity, access new markets and improve their relationships with customers. Three quarters (75%) expect to be profitable by June 2021, while nearly half (47%) are taking measures to increase export revenues.
The report also highlighted that 80% of SMEs think digital adoption will be critical for an enterprise-led recovery and job creation, but only a small proportion (33%) have the bandwidth to invest in technology across key business processes. These businesses would benefit from support to invest in technology, with 40% saying that a technology grant from the Government would allow them to increase hiring.
Sabby Gill, Managing Director of Sage UK and Ireland, said:
“In the words of one of our customers, the insights in this report are a ‘gut wrenching’ read. Behind the stark statistics lie thousands of individual stories of people whose livelihoods and passions are under threat. Businesses have had to radically change their plans and strategies, adapting to unprecedented ways of working. But this has created the potential to drive up productivity, especially where processes have been digitised.
“We have some tough months ahead with many unknowns so if we can help businesses access finance and technology and reduce exposure to risk, we will see new jobs emerging.
“The measures announced by the Chancellor are encouraging but we need to go further. Sage, on behalf of the country’s SMEs, is calling on the government to act now and take a three pronged approach to aid digital adoption, help to boost exports and provide tailored support that encourages entrepreneurialism by equipping the unemployed with essential business skills.”
With only 54% of businesses prepared for challenges that may lie ahead – stability and a business-friendly operating environment will be vital. To help UK businesses adapt to the ‘new normal’, Sage will be hosting a one-day virtual event for UK businesses on the 29th July, giving them practical guidance, industry insights and access to cloud technology. Businesses can register here.
Sage is also calling on the Government to take action in the following areas:
Introduction of immediate support to invest in technology. For example through:
- digital vouchers or grants, a simple and direct way for businesses to get the technology they need
- link loan repayment relief on CBILS and Bounce Back Loans to technology investment or
- claiming a reduction against their tax bill of 200% of the value of the investment.
Create new jobs by encouraging and helping the unemployed to start a new business through:
- Developing and giving access to short courses on essential skills, funded by the apprenticeship levy, to start a business such as business planning, managing cashflow, digital skills
- Embarking on a major comms initiative amongst businesses making redundancies to signpost people to the right advice
- Ensuring all job centres and higher education institutions are sharing the value of entrepreneurship as career advancement opportunity
Help SMEs in many more sectors boost trade and reach new markets by:
- Extending the new Export Academy for the tech sectors to other sectors showing an interest
- Funding regional export strategies across the country offering tailored support
In addition to hosting an event with Nadhim Zahawi, a minister at the Department for Business, Energy and Industrial Strategy (BEIS), Susan Davies, Managing Director of Santander Business and Martin McTague, Policy & Advocacy Chair at the Federation of Small Businesses on Thursday to discuss the findings, Sage invited customers and business experts from the CBI and Be The Business to include their reflections, and the support required for businesses, within the report.
Tony Danker, Chief Executive, Be the Business concluded: “For me, the most important takeaway from this report is that while UK SMEs are optimistic for the future, this is a precarious recovery. Most say they will be making a profit by the end of the year. However, there is a caveat to this optimistic outlook, and this is where I believe policy makers and business support networks must focus their attention.
“SMEs are not well prepared for a second wave of the pandemic or any other significant external shock. I believe the answer to the question of how we should protect this fragile recovery is found within those SMEs that are thinking about tech adoption but have not yet acted.”
Jen Walker, Owner Split Screen Coffee, and Sage Accounting customer, added: “Support through policy changes and grants needs to reach down to the SMEs on the ground, fortifying local businesses who are there to support their communities. We need to work out how we keep a healthy circular economy within our communities that will make businesses resilient to the tribulations of a chaotic and unpredictable global economy that is likely to be with us for some time.
“Of course everyone can do their bit by shopping in their local shops, prioritising local suppliers and taking on a more locally-based procurement process but we also need a brave value shift that values SMEs and will see us Building Back Better despite the rough waters ahead."
- ENDS -
Portland Communications conducted independent research, commissioned by Sage. A 20 minute online survey was fielded between the 18th June to 22nd June 2020 to “SME decision makers”. A sample of 2,000 adults in the UK completed this survey online. Portland drew the sample from an online marketplace and verified the age, gender, employment status and region of each respondent, as well as job responsibilities and the size of the business they work for.
To be eligible for the survey:
- All respondents had to work for a business ranging from 1, 2-50, 50-99, 99-250, 250-499 employees.
- All respondents had to be business owners or hold director-level decision making responsibilities in their business.
Due to a lack of official statistics, no weighting or target numbers were applied to the demographics of our sample.
Sage is the global market leader for technology that provides small and medium businesses with the visibility, flexibility and efficiency to manage finances, operations and people. With our partners, Sage is trusted by millions of customers worldwide to deliver the best cloud technology and support. Our years of experience mean that our colleagues and partners understand how to serve our customers and communities through the good, and more challenging times. We are here to help, with practical advice, solutions, expertise and insight.
- Almost half of SMEs are taking steps to boost exports as a fragile recovery begins
- 47% are taking active measure to increase export revenues
- Profitability is improving but full recovery will be slow – and the recovery is balanced on a knife edge
- 15% do not believe they would survive a second spike
- One in two SMEs are not confident they could survive a further -20% drop in revenue between now and September
- 50% of SMEs expect to make a profit in June and 60% by the end of the year, compared to 44% in April and May
- But by this time next year, a quarter do not expect to be back in the black
- Higher-tech service sectors like financial services and technology are the best positioned for growth and resilience, and the most confident
- SMEs in London and the South East expect a V-shaped recovery, but have been hardest hit by redundancies and in terms of revenue impact
- Managerial roles are the most likely to be hit by redundancies in the coming months, as 65% of businesses planning redundancies attribute this to excessive wage costs or overstaffing that existed before Covid-19
- Technology will be crucial to all aspects of the recovery – resilience, growth and the job market
- SMEs believe that a grant to support investment in technology would be more effective a 2% cut to National Insurance, government investment in retraining or expanding the apprenticeship levy at increasing hiring in the future
- They see increased use of tech as the no.1 driver for growth, alongside diversifying their offering and client base, and greater use of marketing and advertising
- But a large proportion – around 41% - remain on the fence about investment and incentives are needed to drive this