An annual report on the state of small business in Britain has revealed that the ‘enormous challenges’ facing firms during 2020 have sparked rising interest in digitalisation and sustainability.
The Enterprise Research Centre’s State of Small Business Britain report includes findings from a national survey of 1,000 SMEs conducted during December 2020.
More than four in ten businesses said they had suffered a hit to their turnover over the course of 2020 due to COVID-19, with nearly three quarters regarding the pandemic as an obstacle to their success. The uncertainty around EU Exit was also cited as a key obstacle by just over two fifths (41 per cent), rising to nearly half (47 per cent) amongst manufacturers.
These impacts have forced many firms to re-evaluate their priorities, the research found. Around three quarters (74 per cent) said reducing costs had become more important, followed closely by introducing new business processes (72 per cent) and making increased use of digital technologies (65 per cent).
Unsurprisingly, 95 per cent of firms reported using video conferencing software more, but the evidence shows that 2020 also saw greater use of more advanced Industry 4.0 technologies. Nearly three quarters (73 per cent) of small businesses reported using Internet of Things (IoT) technology, alongside AI and machine learning (12 per cent) and Augmented Reality (AR) or Virtual Reality (VR) technology (11 per cent).
Around a third of firms (34 per cent) said greater digital adoption had resulted in higher sales, while nearly one in four (38 per cent) said it had boosted innovation.
The survey also found a growing awareness of sustainability across the board, with 72 per cent of companies saying they had taken steps to minimise the environmental impact of their business over the past year. Large numbers reported taking actions within their business to move towards ‘net zero’ targets.
Commenting on the research, Prof Stephen Roper, Director of the ERC, said:
“Our research underlines the enormous challenges and hardships the UK’s small business community has faced from the pandemic. However, we have also seen plenty of evidence this year that SME leaders can be innovative and adaptable in the face of a crisis.
“A significant proportion of businesses have pivoted and introduced new processes and technologies in 2020, under pressure and at pace, leading to major changes in ways of working and doing business.”