Many SMEs have proved their resilience, now let's make sure they're set to grow

After two years of pushing their resilience to the max, SMEs find themselves being buffeted by a new set of economic headwinds. So how can we get brilliant firms back to doing what they do best: innovating, investing and growing?

While a significant number of larger firms insulated themselves against the worst impact of the pandemic, too many crucial SMEs have struggled to get back on an even keel. Data from our research partner EY shows that 81% of SMEs have been negatively impacted by the pandemic. More than a third saw a reduction in available staff, 3 in 5 saw disruption to supply chains, and almost half suffered a decline in staff morale.  

Now they’re having to navigate loan repayments, cashflow pressures, late and long payments, rising energy prices, and skills shortages – all while continuing to offset the lingering effects of both Brexit and COVID.   

Yet SMEs are the backbone of Britain’s economy, employing more than 61% of the private sector workforce, contributing turnover of ￡2.3trn to our economic health and wealth. It’s why the CBI has partnered EY on a new report that puts the UK’s SME sector in laser focus – highlighting the challenges they face, as well as the ways government and other business support can be used to get them back on track.  

It'll be no surprise that one of the biggest challenges SMEs face is access to finance.

We want the UK to be the best place in the world to start and grow a business, nurturing brilliant SMEs into becoming the kind of global brands that make the world sit up and take notice. That’s the ambition, and that’s why we’re working with EY to provide the information and resources to support SMEs on their growth journey.   

That includes promoting government initiatives like Help to Grow Digital, raising awareness of the support to manage debts – like Pay as You Grow – finding the right partners and intermediaries, and accessing essential authority grants.  

We also look at how SMEs can best start and accelerate their journey to net zero. Winning the race to net-zero offers benefits to every single business – whether borrower or lender. It’s not just about doing the right thing reputationally, or contributing positively to humanity, it’s about seizing tangible opportunities for jobs and growth.

There’s also a really positive story to tell.

While the pandemic may have hit cashflow hard, the level of resilience and innovation among our smaller firms was astounding.  

Many SMEs are already looking to evolve their business models to better serve customers in the current environment. 36% have digitised processes functions, whether that’s embracing disruptive technologies like AI, blockchain or 3D printing, or investing in e-commerce and subscription-based models.

Others have re-examined their relationships with banks and explored alternative providers or different funding options to better meet their needs. 

Getting this right won’t just have a major impact on firms themselves, it will help unlock a whole host of prizes for the UK economy. From global trade to decarbonisation, the opportunities are huge.

We just need to match firms’ ambition with the information and resources they need to take tangible action.  

Challenges aside, it is an exciting time to be a smaller business with new technologies and opportunities emerging every day. With the right finance, knowledge and skills in place let’s all bet big that SMEs across the country can seize this moment and really go for growth. 

Read the report here: https://www.cbi.org.uk/articles/eycbi-launch-powering-growth-an-sme-guide-to-accessing-finance/