Permanent pivots

The research indicates that 64% of SMEs made significant changes to their business strategies in response to the pandemic as more people worked from home; online deliveries took precedence over in-person shopping and certain business models became unviable. These pivots included adopting new technologies (42%); launching new products or services (36%), and shifting to a new customer base (30%).

Notably, 92% of businesses that made these changes have continued them post-pandemic, demonstrating the long-term value of these adaptations.

Learnings from COVID-19: enduring resilience

Six in 10 businesses (58%) are better able to navigate headwinds thanks to their pandemic experiences, the permanent shifts they made and their improved personal and professional resilience. Specifically, businesses feel better equipped to handle economic uncertainty (62%), the high cost of living (49%), and supply chain disruptions (38%).

Additionally, 63% of small business leaders have changed their approach to running and planning their businesses. Almost half (47%) said they would be more likely to adopt new technology, 40% said they now take a longer-term mindset when planning, while 37% said they are more able to make difficult business decisions as a result.

Vik Gubskis, owner, 8 Rocks Deli & Wine, said: “Like many businesses, the COVID-19 lockdown threw a whole host of unprecedented challenges our way. We acted quickly, pivoting to takeaway and home delivery services which allowed us to continue trading.

“Ultimately, that experience has left us more prepared for the future. We have new revenue streams and have grown our team since the pandemic. The lessons we learned have enabled us to adapt our approach to managing finances, meaning we are now more able to plan ahead and negotiate better deals with suppliers. Despite the initial challenges, the pandemic led us to make lasting changes that have helped us grow our business.”

Positive outlook for 2025 with increasing finance needs

Despite the macroeconomic headwinds, SME Britain remains positive and primed for growth. Two-thirds (65%) of small businesses expect to grow in the year ahead, and almost half (43%) are more confident about the next 12 months compared to last year.

Technology is a priority for growth investment, with 47% of SMEs focusing on digital transformation over physical expansion (31%). The pandemic has also influenced SMEs’ finance requirements, with 48% reporting changes to their financing needs. Three-quarters (74%) have increased their appetite for short-term financing, reserving balance sheet for future shocks and 61% have a greater need for business loans.

Lisa Jacobs, Chief Executive Officer at Funding Circle, stated, “Small businesses are the backbone of the UK economy, and this research highlights their enduring resilience, entrepreneurialism and determination to succeed, that I see in all our customers. Five years on from lockdown, SME Britain has fundamentally changed – short term adaptations have become permanent and profitable; strategies have shifted, and new technologies are now an integral part of their daily work life. The digital-first mindset that emerged during COVID-19 is now a permanent feature of SME strategy, positioning them for long-term success.

“We look forward to fuelling these small businesses with our range of flexible finance solutions that are vital to drive growth.”

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