The past two years have been extremely challenging for business across all sectors and localities.
The past two years have been extremely challenging for business across all sectors and localities. The Covid-19 pandemic is estimated to have cost SMEs over £126.6 billion in total – double what was predicted a year ago – and the number of businesses going bust in England and Wales jumped to its highest level in October.
Now, as the Omicron variant surges, many businesses have been left in the lurch following the end of government support for indebted firms.
The resilience of SMEs across the country during this period has been nothing short of impressive. Transforming the way they operate and embracing technology to meet new market demands, the UK’s business community has demonstrated that even in the face of adversities, there are opportunities for expansion, innovation and growth.
As the tumultuous year that was 2021 draws to a close, we must ask, what will 2022 look like for SMEs?
Identifying new revenue streams
SMEs have been operating in crisis mode since the pandemic began, focused solely on the steps they can take to stay afloat in the short term. Whilst recovery will be slower than anticipated, business leaders may be able to shift their priorities next year to concentrate on long-term growth plans, as we begin to recover from the pandemic.
Identifying new revenue streams by taking advantage of technological developments will form a crucial part of this strategy by partnering with technology service providers, businesses can now reach new customers that would have otherwise been difficult to service. In addition to this, the UK subscription market - already worth £323 million annually, and growing exponentially, is seeing more SMEs take advantage of the model. Subscriptions not only guarantee predictable revenue and access to huge amounts of marketing data, but they can also convert one-time shoppers into lifelong customers. It’s a win-win for businesses.
Adopting these new revenue streams will help business leaders gain a larger market share and grow at a faster rate.
Service over price
Securing the best deal isn’t the be all and end all. There will be a stronger focus on customer service in 2022, as more customers become accustomed to online shopping. Offering a seamless online experience, first-class delivery service and high-quality products or services will go much further in securing repeat business.
Pre and post-sale communication will also become vital. Customers are aware and understanding of supply chain issues, inflation and staff shortages, but it is crucial to set realistic expectations and communicate any unexpected changes rather than leaving customers in the lurch.
Debt & equity investment opportunities will flourish
2021 proved to be a record-breaking year when it comes to SME investment. The tech sector stood out in particular, with the UK retaining its position as Europe’s top tech hub. According to research by Tech Nation, investment into UK startups and scale-ups reached a record £13.5 billion in the first half of 2021, led by a high influx of venture capital.
This trend is likely to continue in 2022 – the number of scaling businesses in the UK is rising, with new tech innovations in areas like the metaverse and payments gaining increasing attention from investors, both domestic and abroad. The challenge for SMEs will be standing out from the crowd and offering a unique service proposition that leverages accessible technology to address the current and future needs of the market.
Rise of business consulting
2021 has been a highly disruptive year for SMEs. Whilst phenomenal steps have been taken to mitigate risk, the ongoing uncertainty is set to stay for the foreseeable future. We will see the demand for business consulting accelerate so that leaders can tread the new landscape with confidence.
Right now, many SMEs will be looking to 2022 as a chance to effectively bounce back from the Covid-induced losses, but running a business is no easy feat. Turning to experts in the field will be one of the best tactics to help businesses through this challenging period, to avoid pitfalls and ultimately, become competitive market players.
Flexible working revolution
One thing is for certain: Flexible working will become mainstream. In many cases, it will even be expected by employees.
Over the past two years, the pandemic has triggered the largest working from home experiment imaginable and, not only is the technology now in place, but employees have proven that they can be just as effective, if not more so, when working remotely.
At the same time, employees’ priorities have shifted and the option to work from home is now just as important as health insurance, pension plans and paid leave. As a result, SMEs will need to embrace the hybrid working revolution if they want to remain competitive.
The key for 2022 will be to focus on flexibility rather than a complete shift to working from home. Collaboration and face-to-face interaction are still a key part of every company’s culture and essential to developing talent and ideas within the business. It’s a fine line, but one SMEs will need to navigate to succeed in the new year.
SMEs are feeling the pressure now more than ever before as the Omicron variant surges and uncertainty returns to many sectors. But with the New Year comes new opportunities and, if businesses can overcome the challenges posed by this new variant, there is good reason to believe that 2022 could be the year that SMEs effectively bounce back.