Richard Bearman is Managing Director of Start Up Loans, a government-backed programme launched in 2012 to provide loans to early stage businesses throughout the UK who might otherwise have struggled to secure backing from high street lenders. As restrictions continue to ease, Richard reflects on how changes to consumer spending habits resulting from the pandemic have altered the products and services the UK small business landscape offers for good.
Over a year after businesses across the country had to close their doors, lockdown restrictions continue to ease and small business owners across the UK are returning to a sense of ‘normality’. But of course, the customers they face today are not the same customers they faced twelve months ago: the pandemic has changed people’s lives and spending habits completely, and small businesses must respond to these shifts.
Throughout 2020 consumers continued to spend, perhaps the biggest change being to online shopping, with the Office for National Statistics (ONS) reporting a record high for online sales, which represented 33.9% of all retail spending last year.
Given the UK small business landscape covers such a broad remit, every sector will have its own story to tell about these changing patterns. From spending on meal kits jumping 36% from January ‘ April 2020 compared to the previous twelve months, to a 10% increase in sales at household goods stores and the once-popular retail sector suffering its largely annual fall at minus 25%, consumer demand has changed for all businesses.
But with change comes opportunity. Several business owners who started their businesses with one of our low-interest, Government-backed loans serve as excellent examples for how British entrepreneurs have harnessed the opportunities this new landscape presents. Using the time lockdown spared them, they have innovated products and services in line with today’s customer demands, ensuring the small business landscape will continue to thrive in the years after lockdown ends.
Hopefully, these will provide inspiration to other small businesses to make their own changes as we look forward to a ‘new normal’:
Peter Rogers, from Bedfordshire, founder of Silver Birch Woodcraft
Peter Rogers took out a loan of £10,000 in 2021 to launch Silver Birch Woodcraft, an online store selling bespoke and restored handmade furniture. An ex-pastry chef, Peter put his creativity to good use in carpentry, and has seen his business go from strength to strength over the past year. As he continues to grow his business, he reflects on the radical shift in consumer demand seen by the homeware and furniture industry as a result of consumers spending more time in their homes and deciding to invest in them.
I set up Silver Birch in the middle of lockdown and from the start, my range has been guided by the demands of customers. It would be foolhardy to have a fixed expansion plan, as I notice that people increasingly want to be involved in the design of their own furniture. It’s understandable: our houses have become our offices, schools, restaurants and holiday homes, and it’s looking set to stay that way for many! So naturally, I want to get to know my customer’s needs before I create their furniture.
Ryan Palmer, from London, co-founder of London Sock Company
Ryan Palmer took out two loans of £25,000 in 2014 with his business partner Dave Pickard, to set up the London Sock Company, a predominantly online business selling hand crafted luxury socks with the aim of adding a dash of colour to the ‘sea of monochrome’ in the city. As the public events, which drove so many of our wardrobe choices, ceased almost completely and now so many offices are opting for flexible working models, the demand for luxury smart clothing declined rapidly. Ryan reflects on how the business expanded its offering as a result.
Fortunately, LSC is digitally native, so we were set up for the digital world. We have a strong emphasis on gifting, which came into its own for those special moments in customers’ socially isolated year. While pressing ahead with these elements, we had to rethink our product mix, and think more around the lifestyle of our customers than simply corporate and occasion socks, for which there is likely to be reduced demand in the next few years.
It has been great to go back to basics and rethink our offer and brand in this way. It has left the business in a much stronger position. New businesses shouldn’t be intimidated by the change: the pandemic has opened up the market for true problem solvers and innovators and I truly believe that every business that has survived these challenging times is a better business as a result.