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Financial services sector set to lead the SME Covid-19 recovery

Analysis from Sage of 2,000 small and medium-sized businesses (SMEs) unveils the industries best positioned for growth, resilience and recovery 

  • 63% of SMEs in financial services profitable by the end of Q2 2020, higher than any other sector
  • This group also reports the highest confidence - 90% are comfortable they are coping well with issues caused by Covid-19
  • Financial services firms among the least likely to be facing cash flow problems and the most confident about withstanding a second wave
  • Higher-tech service sectors rank highest in Sage’s SME Sentiment Index, and are most likely to take measures to drive growth

London, UK, 26 August 2020 – Financial services SMEs have emerged as the most resilient and confident sector group in the wake of lockdown, according to Sage’s SME Sentiment Index.

Businesses in this sector are the most likely to have been profitable by the end of Q2 2020, with 63% expecting to turn a profit by mid-year. They are also the most resilient to future disruption; 55% say a second wave of Covid-19 and tightening of lockdown restrictions would not have a severe negative impact.

Financial services is the most confident sector, with SMEs rating their confidence in their business’ future an average 6.4 out of 10. The vast majority - 90% - say they are coping well with the issues they face, compared to an average 64% for the hospitality, beauty & wellbeing and creative sectors and 77% across all sectors.

Whilst cash flow issues have plagued small businesses across industries, SMEs in financial services are among the least likely to have experienced these, and the most prepared for future cash flow and supply chain disruption.

The Sage SME Sentiment Index ranks each UK SME industry sector based on its average recovery trajectory, growth outlook and ability to withstand further disruption. It is based on data from 2,000 SMEs across the UK.

The three sectors leading the Index are financial and insurance services, telecommunications and technology; indicating that higher-tech service sectors are best positioned for recovery and growth. 

Notably, these three sectors are also the most likely to be embracing technology, trade and other initiatives to drive growth. SMEs in financial and insurance services, telecommunications and technology are among the most likely to say that technology will be an important tool to help restart business post-lockdown, and among the top four who say they would most benefit from a Government grant to invest further in technology. They are also among the top five most likely to be actively taking, or planning to take, measures to boost export revenues.

In contrast, less technologically advanced sectors like the creative industries, beauty and wellbeing and construction are less likely to make use of technology and pursue growth initiatives, with overall lower confidence scores.

Sabby Gill, Managing Director of UK&I at Sage, said: “These figures are encouraging for financial services firms, but the overall picture for all SMEs remains deeply concerning. Small businesses are facing a perfect storm of challenges during the second half of the year - ongoing restrictions, a stalling economy, the winding down of government support and the ongoing threat of a second spike; not to mention Brexit preparations and the continued threat of a no-deal Brexit. Behind the statistics are thousands of individual stories of people whose livelihoods and passions are still under real threat, and we must remain vigilant to the challenges ahead.”

“It’s revealing that traditionally higher-tech industries such as financial services, telecoms and technology are among the most resilient and optimistic. Our data tells us that investment in technology will be a crucial pillar of the recovery for small businesses of all kinds – driving job creation and supporting greater resilience, productivity and innovation. 40% of SMEs, who employ 60% of the UK private sector workforce, believe that a technology grant would increase hiring, whilst 80% say technology will help their business post lockdown. Government must empower businesses and stimulate entrepreneurship through targeted and accessible measures to incentivise digital investment.”

To download Sage’s Survival, Resilience and Growth report in full, please click here.

Sage SME Sentiment Index


About the Sage SME Sentiment Index

The Sage SME Sentiment Index is based on independent research conducted by Portland Communications and commissioned by Sage between the 18th June to 22nd June 2020 for the Survival, Resilience and Growth report. This sampled 2,000 SME decision-makers in the UK via an online survey. 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.

The Sage SME Sentiment Index has two axes: resilience and growth. Resilience is defined as an SME’s ability to meet external challenges. Resilience is calculated based on eight indicators from our survey, including what further revenue drop they could absorb, the impact the crisis was having on revenue, their access to finance and their ability to repay it, and how well they were coping with the challenges they are facing. Growth is defined as an SME’s confidence in future growth and the steps that they are taking to achieve it. This includes 5 indicators from our survey, including overall confidence, projected future sales and revenue, and what positive actions are being taken or planned to grow their business.

About Sage

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.