Following the government’s latest support measures for SMEs, new research from small business platform Xero shows that many firms acknowledge they will make more use of technology to capitalise on the post-lockdown bounceback, with the potential for a £16.6billion productivity boost.
According to the Future of Small Business report, Xero predicts that small firms will benefit from a post-lockdown recovery only if they’re able to harness customer loyalty and the right digital tools; ultimately allowing them to compete with corporate giants.
There is a growing depth of public goodwill and loyalty towards small businesses. Just under half of consumers now feel greater loyalty towards local businesses over bigger firms, with 42% planning to shop through small businesses more frequently after lockdown. This rise in consumer conscience will grant small businesses the opportunity to connect with their customers in a way that larger corporations will struggle to replicate. With £18.5bn of accumulated household savings in January alone, the UK is set for a dramatic period of spending when restrictions allow.
Gary Turner, Xero’s Managing Director of UK and EMEA said: “The advantage small firms have is public affection and being better acquainted with their customers. The economic damage wrought by COVID-19 continues to be devastating, so it’s crucial SMEs know how to tap into this human aspect. After so long without social contact, we’ll see a resurgence in the lost art of loyalty. There may also be some old processes SMEs are happy to banish in favour of new technology to put them firmly in control of their business.”
Over half of small businesses said their customers are looking for the personal interaction and customer acquaintance SMEs bring, rather than just a transactional relationship. To build on this unique selling point, SMEs plan to focus on growing relationships with customers, building trust, and creating strong community ties throughout the next year.
Turner continued: “Technology has a critical role to play in helping firms get, sell and operate online, adjust to changing consumer needs, and free them up to focus on building relationships with customers. As lockdown ends, closing the digital divide will be essential. That’s why we need to see the government go even further in supporting SMEs to adopt the digital tools and skills they’ll need to prosper.”
Xero research indicates that if the UK’s 1.1m micro-businesses doubled their uptake of key digital technologies, the economy could receive a highly-welcomed and highly-valuable £16.6bn boost.
It’s positive to see many micro and small businesses already embracing digital tools. For example, 26% invested in cloud technology in order to boost productivity during lockdown, 31% have ceased the use of paper invoices and 26% have abandoned paper payslips all together. As restrictions prepare to be lifted, 27% of those SMEs surveyed plan to continue focussing their efforts on increasing online sales.
The ‘Future of Small Business: Five Opportunities for Growth’ report is based on a survey of 500 SME owners and 2,000 consumers. The report also explores the impact of Brexit and COVID-19 on small business trading plans, and how new financial tech will help level the playing field for SMEs.