Research and Insights Corporate
Welcome to PayPal’s inaugural annual report – The Business of Change. This year’s theme is Recovery and Rebuild after what has arguably been the most testing period for businesses in recent history.
In this report, we explore where small and mid-sized enterprises (SMEs) find themselves as the UK stands poised to reopen after lockdown. It reveals how they’ve dug deep to be resilient, the lessons they’ve learned, and the tools and actions they’ve put in place to emerge stronger than ever before. Times have been tough, no question. Now, however, there’s an undeniable feeling of optimism as SMEs look forward to getting back to business, even though business as usual may well be a thing of the past.
SME Recovery and Rebuild – an overview:
We surveyed 1,000 SMEs including over 500 business owners and found that while the pandemic did affect businesses adversely, the lifting of lockdown restrictions brings a fresh sense of optimism as small and mid-sized enterprises across the UK look to recover.
On an encouraging note, SMEs in the UK survived the pandemic largely thanks to a digital skills boom, with a new focus on digital upskilling and investment in tech becoming an urgent necessity.
Remarkably, over a third of SME owners (35%) told us that the pandemic acted as a catalyst for positive change for their business. The rapid migration to digital technologies was demonstrated by three-quarters (73%) of online business leaders and owners who moved online being forced to learn new digital skills to adapt to a world in lockdown. As result, one in ten SMEs believe they are three years or more ahead of where they would have normally expected to be.
Our report also found that over two thirds (69%) of SME owners say they feel optimistic about the UK reopening. Two in five SMEs in England (40%) say they’re planning to expand into new markets in the next 12 months. One in five (20%) anticipate the UK reopening to be the biggest moment for business growth this year, more so than Christmas Day and Black Friday.
What’s clear is that for the next generation of British entrepreneurs, born and bred in a pandemic world, digital first is about future-proofing the business. Critical lessons have been learned and SME owners have adapted to plan for what a new future of work will look like. As a trusted partner in business, PayPal has the solutions to help SMEs be ready for anything.
At a glance:
SME resilience is driving recovery
The pandemic has been gruelling. Two in five (42%) SMEs considered giving up their business during the very toughest moments. And yet, small and mid-sized enterprises have continued to show remarkable resilience and optimism, even now uncertainty is brewing just when lockdown restrictions will come to an end.
In the face of hardship and adversity, remarkably over half of SME owners (55%) say they never contemplated giving up on their business and now, over two thirds (69%) of owners and business leaders say they feel optimistic about the UK reopening. Two in five SMEs in England (40%) are even planning to expand into new markets in the next 12 months.
Many have seen the pandemic as a positive catalyst for change, with businesses re-evaluating priorities and embracing new markets as well as tech and digital solutions to create opportunities for growth.
Rebuilding in a restricted world
Renewed optimism comes after a tough period for SMEs, as digital opportunities continue to fuel growth and opportunity in our restricted world. When times were at their toughest, 42 per cent of SMEs considered closing down their business altogether, rising to over half (53%) for medium-sized enterprises. A drastic reduction in customers (33%), not being able to see an end to the pandemic (27%), and a deterioration in mental health (26%) were leading factors for SME owners considering closing up shop.
Drive and passion – arguably the two qualities most essential for entrepreneurs - were the two factors that motivated over a third (36%) of UK SME business leaders who didn't consider giving up and kept going through tough times.
Access to quick and easy funding is crucial for SMEs when the worst strikes. In fact, financial support in the form of government loans was critical for a third of SMEs (31%) that didn't consider giving up, with 23 per cent of SMEs operating with a physical presence saying it helped them stay afloat.
Having come face to face with some harsh realities about the future of their business, SME owners proved adaptable and found flexible, digital solutions to keep their businesses going.
SMEs that are embracing digital transformation have a distinct and undeniable edge over those who aren’t. The future is digital and that means having the right toolkit to make a business resilient and future proof.
PayPal Commerce Platform is a comprehensive solution designed to help serve the needs of small businesses, whether they are just getting started or already a thriving business or marketplace. From payments to credit to fraud protection, PayPal Commerce Platform helps SMEs meet their customers where they are - online, on the go, or in your store.
Making it easy and simple to accept, track and log payments, with solutions like PayPal Invoicing for example, is crucial if SMEs are to meet the much-anticipated growth in business post reopening. SMEs must be ready for increased demand on their product and services, more demand from other markets, and increased volume of payment transactions.
Easy and fuss-free payments through point-of-sale (POS) solutions like Zettle card reader card reader and mobile POS app, contactless QR Code payments and Pay in 3 are essential. Competing in an increasingly competitive market by deepening customer engagement with apps like Honey, can make or break a business in the new world of working.
PayPal’s broader digital capabilities offer solutions to the modern-day entrepreneur to help build resilience today and into the future. PayPal is a trusted partner in arming the new generation of SMEs and digital entrepreneurs with the right tools to help them navigate doing business in across all channels—whether that’s at store, online or via mobile.
For more information and guidance on PayPal's available products to suit your small business needs, click here.
1The $15 million grant program, in partnership with the Association for Enterprise Opportunity, has paused accepting new applications due to an overwhelming response.
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