The “new normal”. Social distancing, face coverings, increased health and safety measures, remote working, travel restrictions. We could go on. How we are currently living our lives is certainly unrecognisable in the midst of a global pandemic. Indeed, just this time last year we were unaware of the changes we were going to face.
What is more uncertain is how this “new normal’ will look over the coming months and into 2021. What is for sure though, is that tech will be pivotal. Across all areas of our lives, we have come to rely on tech to ensure that we are able to continue living our lives (somewhat) as we always did.
Lockdown saw us cut adrift from the physical world. Digital solutions became our offices, our classrooms and our human touchpoint. Unable to meet in person; colleagues, friends and families turned to tech to attend weddings, funerals, lessons, meetings, interviews and everything in between. If you didn’t take part in a Zoom quiz over lockdown, where even were you?
Talking of Zoom. On reporting its quarterly earnings in June, Zoom, the video conferencing tool, reported a total revenue of $328.2 million in the 3 months to the end of April 2020. This is a 169% increase from the same period last year.
Not only have consumers become reliant upon tech, but so too have those industry sectors formally resistant to digital change. Pubs are now reliant on on-line booking. Cash led businesses such as barbers and beauticians are having to deal in contactless payments. Cafés who before may have used loyalty stamp cards, have adopted loyalty apps instead. The examples are almost endless.
In evidence of this, a separate study of SMEs conducted by Capterra has revealed that the COVID 19 pandemic has also affected their decisions surrounding tech. 27% of respondents have seen their planned software spend impacted by 50%, with 35% bringing forward their annual spend in software by 6 months. More than half of those asked told researchers that they had been forced to implement new software as a result of the pandemic.
Covid & Tech SMEs
Consequently, the broad and multi-faceted technology sector has been one of (if not the only) area of the UK’s private sector to blossom during the tragic coronavirus pandemic. However, as the use of these tech based services spike, these businesses face their own challenges…namely how to scale operations and to keep up with the inevitable demand.
One particular piece of research conducted in August this year looked into how over 100 of the UK’s tech SMEs have responded to the pandemic.
The study uncovered that 72% of these businesses saw an increase in demand for their services between March and August. Some of these changes were predictable. Let’s take Fintech for example. When lockdown was implemented, customers were unable to (or did not feel safe to) travel to their high street bank. Instead, we relied on mobile and online banking. Indeed, a different study – this time of consumers – revealed that 64% of adults have been 100% reliant on Fintech to manage their financial affairs since March. This is a significant increase. Before lockdown, just 42% of Britons were using Fintech to entirely manage their finances. It may be more telling though to examine each age demographic in isolation. It could be argued that the vast majority of under 30s would be conducting all their finances online or via an app routinely pre-covid.
Growing a Team
An increase in demand for a product or service often requires tech SMEs to grow its team…something which has its own challenges at a time when face to face meetings and travel are restricted, in some cases impossible or even against the law.
Often, the tech itself is easily scalable – SaaS offerings for example; so that is one problem that is fairly easily overcome. However, it typically takes significant human resource to manage a spike in new, sudden and unexpected customer numbers. As the customer base grows, so too does the need for the recruitment and on-boarding of new team members. When looking to make these acquisitions, tech SMEs have the hurdle of not being able to meet candidates in person.
As we write this, it seems as though lockdown rules across the UK are in no two places the same. Local lockdown restrictions across England vary from city to town to county, whilst Scotland, Wales and Northern Ireland are subject to different regulations entirely.
As a result, many businesses are still working remotely while jobseekers may not feel happy (or be allowed to) travel to an interview. Video conferencing will likely remain the default option for interviewing potential employees. Hiring managers will need to think outside the box to create a natural atmosphere in which they can properly get to know the candidate they are interviewing.
SMEs will also need to have a secure understanding of what their own “new normal” working practices will be and what these may evolve into. For example, will the new employee be expected to work in the office, or will this be a remote – or semi remote – role? Perhaps the terms of employment will need to change to reflect this shift. How will businesses effectively train new team members and allow them to settle in as part of a team who do not ‘see’ each other for most (or all) the week? These are all questions that need answering before any recruitment can, or should, begin.
For many tech SMEs, access to rapid investment could be crucial in the wake of COVID 19. To have the capital to react quickly to scale a team or product in order to meet a greater demand is not a luxury that many have, particularly if a business is in its infancy.
The Capterra study we cited earlier confirmed that SMEs were keen on adapting new software, but price remains a concern. When asked about the key factors behind software purchases, decision makers stated that price (58%) and ease of use (53%) are the two most important variables upon which they base their decisions. A large portion of decision-makers, 52% , said the software purchases they make will be critical to their survival during (and after) the pandemic
Even in this time of uncertainty, there are many options open to tech SMEs in need of funding, including both state-backed initiatives and private sector investment.
The Future Fund is a government scheme that provides government loans to UK based companies, ranging from £125,000 – £5 million, subject to at least equal match funding from private investors. These loans are an option should a business be unable to access other government support, either because they are pre-revenue or pre-profit.
Should you want to access more information about The Future Fund, you can read more over on the British Business Bank website.
Investment could also be sourced from angel investors, VCs and private equity firms. Data suggests though, that these types of private investment are not being readily given at present. Between mid-March and mid-July, UK startups raised £2.67 billion. Although this sounds like a lot, this is down 39% when compared to the same period in 2019.
Tech and SMEs post COVID
In a world post COVID it is becoming more and more apparent that businesses across all areas of industry will face significant challenges to scale appropriately, hire responsibly and trade successfully. The willingness to adopt and rely upon tech and digital solutions will undoubtedly play a large role in the ability of these SMEs to grow and thrive. In some cases, it may even be the difference between recovery and closure.
Indeed, in a separate study, data from over 1000 SMEs highlighted that SMEs will need to keep a keen eye on innovation and technology. The study revealed that of the best performing businesses, 76% were ‘continually’ or ‘often’ considering new opportunities for tech in their businesses.
As we tentatively make steps toward the “new normal” – whatever that may look like, we can be sure that tech and digital will play a massive role in the long term plan of most UK SMEs. Businesses will need to be willing to adapt and change in order to succeed and carry on post COVID. They will need to adopt tech to keep up with demand, work remotely and hire and train their staff. Even industries who were formerly resistant to change have had to diversify in order to carry on trading and of course – in some cases – comply with government track and trace requirements.
This is another case where almost certainly, Tech will Save Us.