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SMEs thrive in the pandemic with revenues and profits booming

Despite the economy taking a thrashing throughout the pandemic, the UK’s SMEs report strong financial performance, according to new research published today by business coaching and consultancy firm, Chalkhill Blue.

According to the firm’s inaugural SME spotlight report, 56% of small businesses have seen turnover grow in the last 12 months and 16% said it stayed static (72% in total). Just 28% of SMEs experienced a decrease.

Net profits follow a similar story with 50% of SMEs seeing them grow and 20% remaining the same (70% in total). The positivity continues with the amount directors have drawn out of their businesses. About 30% have increased their dividends and 54% maintained them (84% in total).

This financial performance is reflected in staffing. An amazing 84% of respondents have seen the number of people on their payroll stay the same or grow. This may be down to the fact that many took advantage of government support, with 40% putting people on furlough. This assistance has been welcome news for SMEs, with 73% saying the government’s economic response to the pandemic, “was about right.”

Having largely weathered the storm, businesses are now looking to the future with confidence in key areas such as projected turnover and growth. A large majority (87%) believe their revenue will increase in the coming 12 months, with 80% expecting profit progress.

However, with this optimism comes a realisation that there are major challenges ahead as furlough ends and 2022 beckons. Being able to increase organisational profitability is one of the biggest worries for the UK’s small businesses, cited by cited by 54% of respondents. As is strengthening cashflow, also cited by 54%. Accessing and exploiting new customers and markets is a challenge for 53%. Boosting productivity is on the agenda for 48%, and the skills gap is of concern for 40% of firms. Only if these can be overcome will business confidence lead to real results.

Responding to these specific challenges, Chalkhill Blue is making five key recommendations:

  1. Being able to increase organisational profitability Create a manageable growth plan and use data about your business to become more efficient. But never do so at the expense of customers or your ability to try new things and grow.
  • Cashflow – Develop exceptional financial expertise among directors and senior managers. Always work to improve the “quality” of cashflow by focusing on growing operating margins to consistently cover capital expenditures, dividends, and debt repayments.
  • Accessing and exploiting new customers and markets Use strategic planning tools like Blue Ocean Strategy Planning, which helps find new markets without competitors. Acknowledge that it’s a constant process of refinement that requires everyone to know their role.
  • Boosting productivity – Build strong operational systems and processes. Measure activities that provide real improvements in financial, operational and organisational performance.
  • Talent / Skills Gap Adopt an “always recruiting” mentality and show you understand what different generations of job-seekers want. Show why you’re different and what it means to be part of the team.

Chris Spratling, Director at Chalkhill Blue, said, “The pandemic and Brexit have been body blows to our economy. Despite this, the country’s SMEs have come out fighting. However, many highlight significant challenges ahead. As government support ebbs away, firms will need to redouble their efforts to live up to their optimism. Luck is not a strategy and they need to avoid mistakes as they battle to unlock their true potential.”

The post SMEs thrive in the pandemic with revenues and profits booming appeared first on HR News.

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