Lloyds Bank: 2.7 million microbusinesses saved by technology during COVID-19 crisis
Over 2.7million (48%) of the UK’s microbusinesses have admitted they would have ceased trading as a result of the pandemic without adopting digital technology, according to the Lloyds Bank 2020 Transformation with Tech report, created in partnership with Be the Business. With another lockdown ongoing in England, and restrictions across many nations, many small businesses are facing continued struggles, but it is clear that technology is helping businesses navigate the crisis.
Nearly three-quarters (73%) of microbusinesses that have continued to trade throughout the crisis did so by adapting their business; with one in four (24%) reporting that they modified their business model to survive. A fifth offered new products (19%) and services (20%), just under a quarter (23%) streamlined their business and two fifths (40%) diversified into new areas.
Around half (48%) of microbusiness owners who were able to stay operational during the pandemic credit new technology or digital capabilities with helping to protect and build their businesses.
Over 1.5 million (27%) ventured online for the first time ever, with 2.6 million (47%) able to simplify their business through digital innovation. Of those already online, two fifths (40%) increased the amount of online business they were doing as well as enabling them to diversify. Two thirds (61%) also reported that technology enabled them to keep in touch with their customer and a third (35%) report cost savings associated with digitization.
Nick Williams, Deputy Group Transformation Director, Lloyds Bank said: “The consumer shift towards digital has been well-established for some time, with those businesses without an online presence at risk of being left behind. But now, in the face of a pandemic and the significant restrictions that have come with it, having an online presence has become a necessity, in order to survive.
“With almost half of the UK’s microbusinesses admitting they would have ceased trading during the pandemic without adopting digital technology, it is vitally important that tech providers and online services continue to help small businesses get the most out of the internet. We need to make digital adoption as easy as possible, because as our research shows, it’s a vital lifeline in keeping businesses open. Through the Lloyds Bank Academy, and partnership working with organisations such as FutureDotNow and Be the Business, we are committed to supporting those in need of training to improve their digital proficiency.”
Anthony Impey, Chief Executive, Be The Business said: “This research gives us a sense of the critical importance of accelerating tech adoption for the future of our economy. Tech is now an absolute necessity for small businesses rather than a nice to have, but they need more support to go digital successfully. It’s time for a national effort to help make small businesses more productive and resilient through tech.”
The report also found that Covid-19 has changed microbusinesses dependency on technology for the long term. The number of businesses prioritising digital investment has doubled over the course of the pandemic. Almost half of microbusinesses (46%) are now developing their use of digital systems, technology and skills. Many have started working in new ways using digital tools and services for the first time, such as virtual meetings (19%), social media (12%), ecommerce (12%), and online financial management (11%) to keep their companies up and running. Those who were already utilising these online tools pre-pandemic are using them much more (33% virtual meetings, 27% ecommerce, 31% social media and 21% financial planning).
At least half (56%) of those who have started using various digital services say they will continue to do so in the future. The online tools that are most likely to be continued to be used are social media (83%), online meetings (78%) and online banking (77%). The back office has also seen a much-needed overhaul – one in ten businesses have started using Cloud software and 12% are now using analytics capabilities to better understand their customers.
However, one in three (34%) feel that the volume of technology has proved to be stressful and many call for more digital support. Three quarters (73%) of microbusinesses feel they will require support with digitization and digital up-skilling, with two fifths (39%) have already accessed support to improve their digital proficiency.