2021 performance boosts small business confidence
Two-fifths of small businesses (43%) report that their performance is back to pre-pandemic levels, with nearly a third (30%) stating they are performing better than they were in February 2020.
The research from Enterprise Nation and Starling Bank reveals that while 40% of businesses are yet to bounce back, more (43%) say they are recovering and just 5% are concerned they won’t reach pre-pandemic performance.
More than 810,000 new businesses were founded in the UK between March 2020 and March 2021, the biggest year for creation on record, according to data from Companies House. Although the rate of business failure was high during the period, with 437,790 businesses having to shut their doors, this was by far outstripped by new business formation. In Q1 2021 alone, 211,368 new businesses were registered with Companies House.
‘The Great British Bounceback’ has been driven by businesses’ continued entrepreneurialism; more than half (53%) adapted their company’s services and activities during the pandemic and more than a quarter (28%) launched entirely new products and services in line with changing customer needs. One in 10 small businesses (11%) expanded into a new industry, while 5% even decided to start a new business altogether.
Taking on 2022
The majority (65%) of those surveyed predict that 2022 will be a year of strong performance. Amid continued labour shortages, supply chain issues and rising material costs creating a challenging business environment, only 3% of small businesses report that they aren’t resilient. In fact, two thirds (65%) are optimistic for 2022, with the same amount confident they’ll increase their turnover.
When asked about their strategy for the year ahead, small businesses indicated that they will build on the valuable lessons of the pandemic. Some 60% said they planned to develop new services in 2022, while 45% said they would be investing in technology and 42% said that employee training would be a top priority.
Keshia Sakarah, owner of Caribe restaurant in London and a Starling Bank business customer said: “I started Caribe just before the pandemic began – it really tested my business. By engaging with my local community on social channels, and pivoting to digital ordering and delivery, we’ve had more customers than ever before. I’m excited for 2022 and whilst I know I’ll still face challenges, I’m confident that with creative and entrepreneurial thinking, Caribe will continue to thrive.”
Symmie Swil, head of SME banking at Starling Bank, said: “Our customers are innovating at speed, they’re resilient, and are excited about the opportunities to thrive in a changing environment. Like our customers, Starling adapted our business to meet changing demands, and we will continue innovating to support the evolving needs of our entrepreneurial customers.”
Emma Jones, founder of Enterprise Nation, said: “Small businesses haven’t just bounced back this year – they’ve bounced forward. As we enter the new year with continued uncertainty, it’s encouraging to see so many businesses confident about what’s in store.”
To help small businesses take flight in 2022, Starling Bank partnered with business expert Della Hudson for a series of Flying Lessons, which can be found here.