With vaccine rollouts underway, hopes of an end to national lockdowns, and investments made in technologies during the pandemic, 78% of SMEs expect their business to be profitable by 2022.
As major economies reopen across the globe and consumer confidence rises, Sage has unveiled the true levels of resilience and optimism amongst SMEs across the UK, US and France. Sage’s recent sentiment survey shows that SMEs – the economic backbone of many countries – have reached a turning point and confidence has largely returned.
Three quarters of SMEs surveyed are optimistic about the future of their business and growth trajectory in the next year. Optimism is mainly driven by the vaccine rollout programme (45%), being able to see customers in person again (35%), and projections of increased consumer spending (32%). Over eight in 10 SMEs do not expect another lockdown with most SMEs feeling optimistic that their business will return to pre-pandemic levels this summer – both in terms of profitability and staffing levels. In fact, 81% of SMEs across markets think their business will be totally back to normal profitability this summer. This confidence is led by the US (82%), followed closely by the UK (79%).
An ability to adapt was critical during the pandemic. Many (60%) SMEs say that they have coped well with the barriers COVID-19 placed on them, making big changes to how their business operates. Most commonly, in the UK, 35% of SMEs said they cut overhead costs and, because of further financial barriers, 25% said they relied on their savings to make it through. This behaviour was also reflected in the US, with 38% cutting overhead costs and 27% relying on savings. In France the figure was 35% and 21% respectively.
SMEs turned to technology to overcome difficulties and create efficiencies within the business. In fact, 76% of SMEs say they now rely on technology. In the UK, 52% used new technology to sell more and stay connected with customers or improve how their business operates. In France, 67% used technology in this way while 64% of SMEs in the US also invested in new technologies, nearly all of whom said this increased investment improved their business.
Renewed optimism is driving hiring plans, and as SMEs grow their workforce, they will continue to look at how they can increase diversity and prioritise employee wellbeing. One-third of SMEs are expected to hire in 2021, which could create millions of jobs. When applied to ONS data on employment from SMEs, this could mean 1.2 million more jobs in the UK, in France 2.4 million jobs and 4.6 million in the US.
Since the start of the COVID-19 pandemic, SMEs have been thinking more about their wider role in society, ranging from employee wellbeing initiatives, to being more environmentally sustainable, and becoming a more diverse employer – with many SMEs expected to make further improvements in the upcoming year. In the UK, there will be a bigger focus on ways of working and employee wellness with 37% looking to increase physical wellness, and in the US, 47% of SMEs will look at improving flexible working. In France, we are seeing a drive for change in recruitment to prioritise diversity (34%).
Steve Hare, CEO of Sage Group comments: “As the economic environment improves, optimism amongst our customers is increasing and as is their confidence to capitalise on the opportunities ahead. SMEs are accelerating investment in people and digital technology, prioritising flexibility, resilience, and productivity. This is a clear sign they will bring the bounce back into the economy, and why they need to be at the heart of any recovery plans.
We must make sure this swell of optimism is given the opportunity to become a tidal wave of growth. At Sage, we have called on governments for support and investment to accelerate the recovery of SMEs during these difficult times and made our own investments in supporting an SME led recovery.
We will make it our priority to continue listening, give unheard SMEs a voice with governments and use our time and expertise so that the economic recovery is an inclusive one.”