What does the future hold for UK SMEs?


From large corporations to SMEs, the pandemic has been incredibly challenging for businesses in almost all industries. Many were forced to adapt to remote working overnight while others have had to deal with extended periods of closure or reduced activity.

But with growing consumer confidence on the back of the UK’s planned reopening and so-far successful vaccination campaign, could an economic recovery be on the horizon? The mood among business owners appears to be understandably mixed right now, with signs of hope balanced against fears for the worst.

Below we investigate the current market conditions and outlook for UK SMEs.

Cash flow problems

Cash flow is known to be one of the main challenges for SMEs even in normal times when business operations are relatively predictable. But after more than a year of extreme disruption that nobody could have foreseen, many have seen their cash flow take a major hit.

The impacts of this problem include being unable to pay staff or overheads at one point or another, as well as being unable to invest money for recovery or growth.

Some SMEs have had to find ways to reduce their spend as a result, whether through pausing projects, reducing staff hours or other cost-cutting tactics.

Optimism for recovery or fear for survival?

Even with major cash flow challenges taken into account, the gradual reopening of the economy has provided cause for cautious optimism among some SMEs. Many are simply excited to get back to regular working patterns and connecting with customers – while others are confident of growing revenue in the short to medium term.

Some SMEs have seriously struggled to weather the storm, however. Due in part to further setbacks caused by successive lockdowns, a quarter of small business owners fear they’re unlikely to be trading beyond the end of the year unless they can find extra funding.

Many report feeling stressed over issues such as staff welfare, health and safety measures and reduced capacity.

What help is available for SMEs?

Lots of SMEs are still heavily reliant on the government’s job retention scheme, which is scheduled to come to an end in September. The business interruption loan scheme has also provided a much-needed lifeline to many but is now closed for new applicants.

In response, some alternative finance providers have made new options available and reassured SMEs that they can still access support if they need it. Without extra funding, many may struggle to maximise reopening opportunities or even reopen at all.

Building awareness of suitable finance options is now likely to become a key focus for industry leaders as businesses work to get back up to speed.

SMEs have had a rough ride over the past year. Are you confident of an economic recovery in the UK?