Date: 1 September 2021
Author: FINTECH Circle
During the pandemic in the UK, micro and small businesses have been hit the hardest. We sat down with Matthew Jaffa, Senior External Affairs Manager for London, FSB, to discuss how small businesses responded to the challenges over the past 18 months, and why now is the time to innovate.
There’s been a lot said on this topic, however, what impact do you think the pandemic has had on small businesses?
The pandemic has led to a lot of monumental decisions being made by small businesses. Many looking at their business model and either being forced to or choosing to adapt into different business areas. Many altruistic businesses have supported their local communities and it has been heartening to see these business stories.
A lot of businesses have had to take on further debt over the last 18 months. Around 2/5ths of FSB members with debt now say that the current level of debt is unmanageable – and so this is a critical area of public policy that needs to be addressed.
But for most businesses, they will be questioning whether they want to retain that physical space, whether to take up more manageable debt in the business, whether to increase their investment in the business. It will largely be down to confidence and small businesses having the confidence to create the jobs of the future and make the critical steps to grow their business.
What are the positive steps small businesses have taken during the pandemic?
Despite these incredibly difficult times for many, with hugely uncertain futures ahead, the resilience of the country’s 5.8 million small businesses has never been more on display than it has during this pandemic. Countless small businesses are coming forwards to help each other, engaging in their local communities and doing their bit to get through to the other side of the crisis. Even before the country started shutting down, FSB research had found that 80 per cent of small firms volunteered and/or contributed to a local community organisation or charitable cause.
The acts of kindness on the part of small businesses are perhaps the most common stories emerging from all parts of the country. Small businesses in towns, cities and rural areas have been innovating and reinventing themselves to survive as well as helping their communities.
Small business leaders have been at the frontline, carrying out key community roles during the crisis (57%), prioritising and supporting vulnerable customers (30%), donating provisions to local food banks (24%), supporting to key workers (23%) and home deliveries to vulnerable customers free of charge (19%) as well as signing up to be NHS volunteers (9%).
Small businesses are the backbone of the country, and that continues to be the case during the crisis and proves to show why it’s more important than ever to support SMEs.
Why is it important for small businesses to innovate?
Innovation enables businesses to make significant business improvements within the firm. As recent research has shown, the productivity dividend attached to micro businesses increasing their adoption of digital technologies like cloud-based accounting services or HR software applications could be game-changing. It is well established that improvements in leadership and management practices, generating, for example, more employee engagement, has a significant impact on improving productivity.
Supporting innovation and enhancing productivity cannot be thought of in isolation of related policy interventions, such as supporting exporting. The replacement of EU funds and the design of the UK Shared Prosperity Fund represent opportunities to reboot the business support landscape. This does not require huge institutional change. In England at least, there has already been too much of that. But it does mean new ideas and a renewed commitment to supporting entrepreneurial talent within the UK to be the best that it can be.
How can financial technology help entrepreneurs to grow?
Financial technology can help firms who want to enter new markets and expand operations. Whether you’re developing new products, buying new equipment, or embarking on new sales initiatives, growth finance can help generate more revenue and profit. There are a wide variety of funding products available for businesses from challenger banks, alternative finance providers and high street banks. Credit can be obtained on a secured basis against business assets, or on an unsecured basis, where your credit score and ability to offer a personal guarantee will be more important. The FSB Funding Platform can provide the support needed in this area.
How does FSB support business owners?
Established over 45 years ago to help our members succeed in business, we are a non-profit making and non-party political organisation that’s led by our members, for our members.
Members receive an exclusive package of great value business services including advice, financial products, and support. The benefits include protection in the case of tax inspection, legal and HR advice, as well as local networking groups and business banking.
We don’t only provide fantastic membership benefits – FSB is also the UK’s leading business campaigner, focused on delivering change that supports smaller businesses to grow and succeed.
Matthew Jaffa is the FSB’s Greater London spokesperson and leads on Greater London policy issues affecting small businesses. He also previously worked in the national policy team working on education and skills, and transport policy.
Prior to working at the FSB, Matthew worked in the Cabinet Office in the Better Regulation Executive looking at European Regulatory Impact Assessment and the Strategy Unit, where he was a researcher on various strategic projects.