Shawbrook research reveals UK micro-businesses set to bounce back
More than three quarters (77%) of UK micro-businesses expect activity levels to bounce back over the next 12 months as consumer demand rises, according to new research into one of the most important parts of the UK economy.
Shawbrook Bank’s Micro Business Monitor surveyed UK businesses with 25 employees or fewer – known as the backbone of the economy – in a bid to understand the opportunities and challenges that lie ahead for more than 5.7 million firms in the UK.
It found that seven in ten businesses anticipate growing levels of activity because of increasing consumer demand for products and services. This was followed by more than half (56%) who cited the introduction of new revenues streams, 54% who said investing in growth or expansion and 26% who had experienced increased cash flow due to surplus profits.
Almost a third (31%) planned to expand their product or service offering over the next 12 months, while more than a quarter (27%) said they would invest in new equipment or invest in digital, technology or automation.
A fifth (17%) also intend to hire additional full-time or part-time employees in the next six to 12 months.
Positive impacts of the pandemic
Six out of ten (62%) of those surveyed had seen demand for their products or services increase since the start of the pandemic, while 21% said demand significantly increased. Fewer than one in ten (9%) said demand had significantly decreased.
Those who said demand had dropped blamed falling consumer demand (62%), the fact that trading paused due to lockdowns (59%) and the impact of staff isolating or shielding (20%).
Alun Williams, commercial director of Savings at Shawbrook Bank, said: “It’s extremely encouraging to see micro-businesses have a positive outlook for the next 12 months, a reflection of the agility that allows them to adapt more easily to external factors. However, short-term, micro-businesses need to think about upcoming opportunities or challenges and how they will be funded.
“Many firms have experienced huge changes over the past 18 months but have learned to adapt or innovate and are now in a position to expand their offering. Having the availability of business savings will help these firms invest in their future, create new jobs, or upskill staff.
“I’d urge any business to include savings as part of their long-term strategy and planning as having this pot of money can provide great reassurance, which after recent headwinds, can only be a good thing.”
Planning ahead
More than two thirds (64%) of those surveyed said their firm had a business savings account. Almost a third (31%) were saving to protect against future disruption and more than a quarter (29%) were saving to invest in technology, digital or automation. Nine out of ten (92%) firms with a business savings account said it gave them the confidence to operate successfully.
Encouragingly, when it comes to control of their finances, more than half (55%) of businesses knew exactly where every penny was coming from and going to, while almost a third (31%) knew they had enough money coming in to cover what needs to go out, even if they were not clear on the timings of all payments.
Case study example
Glendale Creative, a full-service design and marketing agency, decided to pivot its business after live events and conferences were cancelled during lockdown.
The firm used its business savings pot to upskill colleagues to meet changing demand for digital creative briefs and invested in new IT and security infrastructure to support staff working from home.
Sara Garvey, finance director at Glendale Creative, said: “When Covid-19 struck, the desire for many of our in-person services disappeared. This forced us to pivot and focus on developing the digital side of our business. The requirement for digital assets intensified, including interactive online documents, coding, HTML5 advertising, video content, social media assets, animations, and voice overs.
“As businesses developed new ways to communicate with their staff beyond traditional email, the requests for moving image also increased significantly. Our clients wanted to share their latest strategies, policies, and updated systems to their customers and homeworking staff in the most innovative way – to not only grab their attention but also maintain it. Thanks to our savings built with Shawbrook, and the nature of the account we had with them, we were in a solid position to react quickly.”
Glendale Creative has been a business savings customer of Shawbrook Bank since 2019, adopting the Bank’s Business Easy Access saving product.
Shawbrook Bank has a range of solutions to suit the needs of microbusinesses and individuals across the UK. It offers easy access, notice accounts and fixed rate bonds to business +customers and, as of 30 June 2021, its customer savings reached 7.8bn.