Resilience Is More Relevant Now Than Ever for UK SMEs, New Report Reveals

A new report published by the UK’s largest small business lending platform, Funding Circle, in partnership with insights consultancy Savanta, looks at how resilience for SMEs and the impact of staff wellbeing is more important now than ever before.

Small businesses have been hard hit by the pandemic, geopolitical issues and economic uncertainty over the last few years. More than three in five (63%) UK SMEs say this period has been the most difficult in their history with almost two thirds (64%) saying it’s been the most stressful. However, business owners continue to have a resilient mindset and three quarters (74%) of small business leaders would still recommend running a small business to others.

Determination is a key trait of small business leaders as almost three quarters (74%) say they tend to bounce back quickly after difficult times, and three quarters (75%) are determined they will always find a way for their business to survive no matter what happens in the world.

To explore the characteristics of being a resilient business, the research rated small businesses against financial, operational and personal resilience metrics, with those performing well across all three categories most likely to thrive during challenging times. The research revealed that:

• Highly resilient businesses outperform financially and are more positive about future growth prospects.

• Almost half (49%) of the businesses surveyed said they achieved a better financial outcome in 2022 compared to 2021.

• Yet, this figure is nearly four times higher amongst those rated as high resilience compared to low resilience (74% vs 20%).

• Looking ahead, over half (54%) of businesses are positive about their growth prospects in 2023 – but this is six times higher for high resilience businesses (84% vs 13%).

This is an overwhelming difference in confidence, demonstrating the value in focusing on resilience. And it’s not all about financial performance; the correlation holds when you remove this element. Businesses that show high operational resilience are three times as likely to be positive about their future financial outlook than low operational resilience counterparts (86% compared to 30%). Similarly looking at personal resilience alone, 62% of high resilience businesses are more positive about the future compared with 44% for low resilience.

Prioritising wellbeing is vital to flourish as a small business

The data also highlights the link between financial success and a focus on health and wellbeing.

• An eighth (12%) of highly resilient businesses are making ‘improving staff wellbeing’ their top priority over the next 12 months, and 35% place it in their top three, in comparison to just 5% and 22% respectively amongst low resilience businesses.

• Three times as many low resilience businesses have no wellbeing initiatives in place, compared to high resilience businesses.

• Two fifths (40%) of SME leaders have considered exiting their business in the past as a result of the impact on their mental health, but two thirds of SMEs leaders say they now have good mental health.

• Taking time out and having screen-free time had the most meaningful impact on mental health for SMEs.

• Business leaders take different approaches to improve mental health including therapy sessions, which is substantially more common amongst younger leaders, with one in five (21%) 18-24s having done so compared to 0% of over 65s.

Alexander Allen, UK Managing Director at Funding Circle, said, “From working with small businesses for more than decade, we have seen first-hand how resilient they are, and we are constantly inspired by their agility and determination through challenging times. This research demonstrates how important building resilience and focusing on wellbeing is for SMEs to thrive, and we hope these insights encourage small business leaders to focus on their own and their staff’s wellbeing, enabling them to develop resilience in their business and go from strength to strength.”