Tuesday 30 June 2020 2:06 pm

Lockdown propels technological revolution for small businesses

Save our SMEs

Small businesses in the UK achieved three years of innovation in just three months during lockdown, new research has found, as the coronavirus crisis spurred British business to adopt unprecedented changes to survive. 

More than a third of businesses in the UK have changed or are changing their operating model to adapt to new consumer needs molded by the lockdown, a report released today by charity Be the Business found.

The figures mark the same scale of innovation usually expected over a three-year period, as measured by the Department for Business, Energy and Industrial Strategy. 

Read more: Flexible thinking has got small businesses through this crisis — now we can shop local to support them

Technological revolution

The uptick was in large part due to businesses increasingly turning to technology to weather the pandemic. 

Overall, two thirds of small businesses either adopted or are considering adopting new technology, signalling a major acceleration in digital innovation for the UK, the report found.    

Be the Business, an independent charity created to close the UK’s productivity gap, is supported by senior business leaders such as the CBI’s Dame Carolyn Fairbairn, António Horta-Osório, chief executive of Lloyds Banking Group, Doug Gurr, head of Amazon UK. 

The charity found that nearly half of small businesses started using virtual meeting technology such as Zoom during the lockdown, as quarantine measures forced staff to work from home. 

Meanwhile, more than 22 per cent of British businesses rolled out ecommerce operations for the first time during the pandemic, as Brits flocked online to shop after stores were forced to shutter in March. According to Be the Business, the same amount of new ecommerce adoption has happened over the last three months as in the whole of 2019. 

“The global pandemic has created the greatest change for business since the war. Between a third and half of [UK] businesses have altered how they do business, by introducing new processes, services and technology,” said Be the Business.

Tony Danker, chief executive of the productivity charity, added: “Three years of ideas, inventions and new technologies in just three months is testament to the tenacity and latent entrepreneurial spirit of British business in the face of hostile economic conditions.”

‘Permanent scarring’

However, he warned that “we must not under-estimate the fragility of any recovery and effects of possible scarring”.

The UK is facing a major unemployment crisis as months of lockdown have crippled businesses across sectors and triggered a flurry of redundancies.

Three-fifths of small businesses in the UK have had to furlough staff during the pandemic, the report found, while more than a quarter have made redundancies as the lockdown begins to ease.

Be The Business found that small businesses expect to lay off around 11 per cent of furloughed workers, while around a third said it was too early to know whether they will be able to retain furloughed workers in the coming months.

Major recession ahead

Data released today by the Office for National Statistics showed that the UK economy shrank 2.2 per cent between January and March, marking the worst economic contraction in 41 years.

UK jobcentre claimants have risen 126 per cent since the start of lockdown, as chancellor Rishi Sunak warned the UK faces a “major recession”.

According to Be the Business, 53 per cent of small businesses feel they have insufficient clarity to make decisions on how best to adapt their operations for future trading. The productivity charity urged the government to focus financial support on this sector of business, and called on the chancellor to use the current “once in a generation window of opportunity” to  up investment in technology.  

Prime Minister Boris Johnson today announced £5bn for capital investment projects, including £900m for “shovel ready” local growth projects.

Read more: Industry reacts as Boris Johnson lays out ‘New Deal’ recovery plan

The Federation of Small Businesses said Johnson’s so-called New Deal must be fair to small companies. National chairman Mike Cherry said: “It’s encouraging to see the government returning to its levelling-up agenda — an agenda made all the more important as we emerge from a recession. 

“For too long the small business community has been blighted by regional disparities and creaking infrastructure. It’s good to see the first steps towards addressing these shortcomings.”

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