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Wednesday, September 22, 2021

Bolstering the economy’s backbone

Small and medium sized enterprises (SMEs) have long been hailed as the “backbone” of the UK economy. However, the onset of COVID-19 hit them particularly hard, with 80 percent seeing their revenue declining greatly from March-June 2020 alone.

Given SMEs’ importance to the economy, and its post-pandemic recovery, the Government has naturally promised a number of support schemes. For example, a £520 million initiative to help SME managers develop their skills and grant organisations access to the latest technology was announced in March of this year.

Despite such promises, in addition to the easing of lockdown restrictions since April 2021, SMEs are yet to fully recover. Indeed, a recent survey of decision makers within SME’s, commissioned by One World Express found that 42 percent of SME’s (businesses with 10-49 employees) have not seen any improvement in business performance.

The question, therefore, is what is inhibiting their recoveries?

Return to normal?

This could be for numerous reasons; for example, customers may still feel uncomfortable visiting the businesses’ site in person, causing a decline in footfall. Meanwhile, the tapering down of furlough may have stretched financial resources.

Another significant reason could be the “pingdemic”, driven by the NHS track and trace app, i.e. when members of staff are informed by the app that they must isolate after coming into contact with someone who tested positive for COVID. At its peak, in the week to July 21st, nearly 700,000 people in the UK were alerted to self-isolate.

Evidently, those with smaller teams will have been hit hardest by this; One World Express’ research revealed that 81 percent of businesses with between 10 and 49 employees faced staff shortages because of employees being told to isolate.

Whilst isolation guidelines are changing – as of 16th August people who have received two vaccinations no longer have to isolate if they encounter someone infected with COVID – many organisations will remain apprehensive. For many, the decline in productivity and revenue because of staff shortages will have already taken their toll. Indeed, 52 percent of SMEs are yet to return to full operational capacity, according to One World Express’ study.

As such, greater support is needed.

Supporting the economy’s “backbone”

Adequate financial support will be essential. One World Express’ survey found that 60 percent of small business decision makers are calling for greater clarity regarding what long-term financial support will be put in place.

Indeed, as the Government tapers down short-term support mechanisms such as furlough, it must develop sustainable financial policies to ensure that support is accessible to all small businesses. Doing so will provide an invaluable safety net for SMEs as the plan for the years ahead.

Likewise, the Government must ensure that infrastructure receives appropriate funding to facilitate efficient supply chains within the UK. A combination of Brexit changes and COVID-19 has upended many organisation’s operations; for example, stricter border controls and customs changes drove major delays in deliveries of key materials – and such problems could be detrimental to the survival of smaller businesses.

As such, the Government must clarify infrastructure plans to facilitate sustainable supply chain and logistics strategies. From investing in transportation infrastructure, to collaborating with border controls to reduce bottlenecking, it is vital to ensure that SMEs are not left short of materials, or forced to delay deliveries. Otherwise, their survival will undoubtedly be hindered.

Evidently, the Government must offer a two-pronged approach to supporting SMEs; what’s more, they must clearly communicate their plans with SMEs. In failing to do so, they may struggle to develop long-term business strategies that will facilitate their survival and future growth.

Atul Bhakta, CEO,  One World Express

Atul is a creative entrepreneur who has led the One World Express vision for 20 years. He also holds senior titles for other retail companies, underlining his vast experience in the world of eCommerce, trade and business management.

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