Over half (57%) of SMEs adapted and changed the way they do business as a result of Covid-19 and half (51%) now plan to completely rethink their long-term business strategy moving forward. Introducing alternative operating hours was the most widely implemented operational change, with almost one in five (18%) business leaders taking this step. Moving their business online (14%) and changing products or services (13%) were also methods used to ensure business continuity during Covid-19. But over a third (36%) of SMEs said they would not be ready to face any other challenges or future crises until they had dealt with Covid-19, and only one in five SMEs expect their business to return to operating at pre-Covid-19 levels in 2020.

Kenny Tutt, owner of Pitch restaurant and winner of MasterChef 2018 said: “Like many small business owners I put my heart and soul into my business, and it has been a struggle to overcome the impact of Covid-19. Without help from the government and lenders, I, like many businesses may not have pulled through.

“But difficult situations can force positive change. From designing a new take-away suitable menu, through to social distancing measures we have adapted to create a relaxing and enjoyable experience for guests. I’ve been taking what I learnt during Covid-19 to develop a new business plan, and while there are still many uncertainties, with the right support, more businesses can hopefully find a way forward as lockdown eases.”

Santander’s study showed that businesses were quick to respond to the pandemic, with over seven in ten of those who adapted bringing in their changes before the end of March 20203. Looking ahead, of the SMEs who rethought their long-term business strategy due to Covid-19, over a quarter (28%) say their business will be more online. One in five (20%) plan to occupy less physical space, as almost a third (29%) plan to have their staff working more remotely in future. More drastically, one in seven (16%) say they will look to re-purpose their business completely.

The efforts of SMEs have been well received by the public, as a separate Santander study of over 2,000 UK consumers found that 60% want local SMEs to keep the changes they made once the pandemic is over. In a boost for local businesses, over three quarters (77%) of consumers feel that the pandemic has shown them that Britain would be worse off without SME businesses.

Small business recovery and outlook

Despite the innovations of SMEs helping them to survive the pandemic so far, over half of SME leaders (58%) have reported a decline in their profits and revenues, which suggests that despite attracting new customers, consumers have been spending less with them.

Santander found that a third of SME leaders feel anxious about the future of their business with only a fifth (19%) expecting to return to normal operating levels by the end of 2020 and almost a third (32%) by July 2021 4. One in ten SMEs in the West Midlands never expect their business operations to return to pre-Covid-19 levels. Meanwhile, businesses in Northern Ireland are more hopeful with over a third (36%) expecting to return to normal before the end of 2020.

The majority (60%) of leaders at SMEs are worried about their ability to attract customers back as the economy re-opens, with nearly a fifth (18%) concerned about the level of investment in marketing needed to restore customer spending to pre-Covid-19 levels.

The findings come as Santander launches a new business support programme, ‘Survive and Revive’ designed to help businesses transition successfully out of the lockdown and ensure they have the capabilities and tools to prosper in a post-pandemic environment.

Susan Davies, Head of Business Banking, Santander UK, commented: “SMEs are the backbone of the UK economy, and now more than ever, are proving to be invaluable to the local communities in which they serve. With many adapting, almost overnight to survive, we are proud to have helped them on their journey through the provision of more than £3 billion in Bounce Back Loans. Now with the launch of our new business support programme, we hope to continue to help small businesses as we emerge from lockdown and look to the future.”