Future formula for SME success will substitute old working methods for new tech, with a resurgence in personal service and the ‘lost art’ of loyalty
Following the government’s latest support measures for SMEs, new research from Xero, the small business platform, shows that many firms acknowledge they will make more use of technology to capitalise on the post-lockdown bounceback, with the potential for a £16.6bn productivity boost.
There is a growing depth of public goodwill and loyalty towards small businesses – 52% of consumers surveyed plan to support SMEs more after the pandemic. With £18.5bn of accumulated household savings in January alone*, the UK is set for a dramatic period of spending.
According to the Future of Small Business report, Xero predicts that small firms will benefit from a post-lockdown recovery if they are able to harness customer loyalty and the right digital tools – allowing them to compete with corporate giants.
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.”
Half of consumers (49%) now feel greater loyalty towards local businesses over bigger firms, and 42% plan to shop small more often after lockdown. This gives small businesses an opportunity to connect with customers in a way corporates will struggle to replicate.
Over half of small businesses (53%) said their customers are looking for the personal interaction and customer acquaintance SMEs bring, rather than just a transactional relationship. To build on this, SMEs plan to focus on the following areas this year: growing relationships with customers (39%), building trust (27%), and creating strong community ties (24%).
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 get a £16.6bn boost.
It’s positive to see many micro and small businesses already embracing digital tools. 26% invested in cloud technology to boost productivity during lockdown, one third (31%) have stopped using paper invoices, and 26% have abandoned paper payslips. As restrictions lift, 27% plan to continue focussing on increased 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.
Xero recently urged the Government to go further in equipping businesses with the digital and financial support they need. Xero’s Road To Small Business Recovery Manifesto includes calls to: accelerate digital adoption, support free trade for small firms and counter the late payments culture.