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The rapid adoption of new digital skills and technology by small and medium-sized businesses (SMBs) during lockdown could lead to an additional £4.1 billion in UK GDP1 each year over the long-term, according to new analysis developed by financial management software provider Intuit QuickBooks and Oxford Economics.
The findings come three months after The Digital Opportunity for Small Businesses report, which was published by QuickBooks and Oxford Economics pre-lockdown in March 2020. At that time the report identified a significant opportunity to boost UK productivity through digital upskilling and infrastructure.
Together the two reports provide an interesting analysis of the effect of three months of accelerated SMB digital upskilling as a result of COVID-19.
Despite the sizeable short-term effect of COVID-19 on the economy (69% of small businesses report a negative impact and 36% believe it will take between six and 12 months to fully recover), Oxford Economics’ analysis suggests that if this unique period of accelerated digital upskilling continues, the associated productivity gains will persist.
The report breaks down the gains by region, with London estimated to benefit the most (£962 million annually). In March 2020, only 7% of SMBs’ turnover came from e-commerce. Since lockdown, 20% of SMBs have started using e-commerce for the first time, selling either via their website or an online marketplace, demonstrating the opportunity for SMBs to pivot or adapt their business.
While less than half (47%) of SMBs had a website pre-COVID-19, one in ten (10%) have now set this up for the first time.
Nearly one in six (58%) SMBs have adopted some form of new digital technology for the first time since lockdown began, with the most common of these being:
With SMBs making greater use of digital, the majority (86%) say they have changed the way their business operates since COVID-19 hit, including 57% who describe these changes as significant. Of those who made changes, 80% expect some or all of these to be permanent – suggesting the shift towards digital will become a long-term feature of the SMB landscape.
The research has identified three common profiles of SMB businesses that have used digital to ‘pivot’ and evolve their business during lockdown.
Chris Evans, Vice President and UK Country Manager at Intuit QuickBooks said “COVID-19 presents the most challenging small business environment I’ve ever seen. We speak to owners and founders every day who have felt significant pain, most often around cashflow and making ends meet. But we’ve also seen first-hand just how agile and entrepreneurial SMBs can be, adopting new digital systems or models such as e-commerce in order to pivot their business, sometimes in a matter of days. ”
“We have always strongly believed that connecting all aspects of a business through digital – from cash flow and payments to payroll – can boost productivity and unlock new revenue opportunities. No one could have anticipated this pandemic would accelerate digital adoption by years, but SMBs are already experiencing the benefits that digital can bring.”
“Continued use of digital tools will not only enable SMBs to survive; in time, they will thrive. We’re committed to giving small businesses the support they need, working hand-in-hand to create a more efficient, productive, digitally-first SMB landscape.”