How Small Businesses Are Driving U.K. Growth
The article below is from our BRIEFINGS newsletter of 27 January 2022
How are small businesses faring in the U.K.’s post-pandemic recovery? We spoke with Charlotte Keenan, head of Goldman Sachs’ Office of Corporate Engagement International, about the team’s latest research, Engines of Growth, which looks at how small businesses in the U.K. are adapting and thriving during a period of extreme uncertainty.
Charlotte, what are you seeing in the small business community?
Charlotte Keenan: As the pandemic has continued to evolve, so have the challenges faced by small business owners. To truly understand the effects of COVID-19 on the U.K.’s small business population, we conducted a survey of over 1,000 entrepreneurs, including graduates of the firm’s 10,000 Small Business (10KSB) U.K. program and a control group of similarly high-growth small business owners.
The results are encouraging. During the pandemic, 68% of 10KSB U.K. alumni changed their business model; 69% introduced new products or services; and many have increased turnover and employment. Small businesses have used their adaptability to develop new and improved products and services to navigate this period of heightened uncertainty and identify new areas for growth. In fact, of the alumni who introduced new products and services, 55% were completely new to the market. We believe that the adaptability of the 10KSB community will be instrumental in building back the U.K. economy.
How are small businesses in the U.K. addressing the widening skill gap caused by the pandemic?
Charlotte Keenan: The emerging skills crisis is the greatest challenge the economy faces in response to the pandemic, but we see small businesses as an integral part of the solution. They’re focused on upskilling young people, developing talent and creating jobs that help fill the emerging gaps in the U.K.’s transition to a high-skilled economy. The survey found that 83% of 10KSB U.K. alumni have increased the skills of their workforce since the start of the pandemic and 79% have prioritised hiring and developing young talent.
In fact, one of the 10KSB U.K. alumni we spoke with, Lawrie Abercrombie, told us that he’s continually looking for ways to invest in the next generation of talent. His business, Arcanum Information Security, now runs a program to develop junior staff members by providing university students with a placement year and the opportunity to become qualified digital forensics professionals. To date, six of these students have returned to Arcanum as full-time employees following graduation. By upskilling the workforce, Lawrie and other entrepreneurs are creating jobs that are both rewarding and well-rewarded.
The pandemic has also increased the pace of digital adoption across all sectors. How are small businesses adapting to stay competitive?
Charlotte Keenan: Over the last two years, the value and growth potential brought about by digital advances has been immensely magnified. This creates a huge amount of opportunity, but many businesses are still grappling with how to leverage technology to unlock their latent growth. We believe it’s vital for small business leaders to explore how technology can help them to unleash their full potential, regardless of the sector they’re in. The good news is that we’re seeing a shift amongst the 10KSB U.K. alumni. Survey results revealed that 88% have accelerated changes to their use of digital technologies and 93% use data in their decision making.
How are small businesses driving the agenda on sustainability?
Charlotte Keenan: As well as being fundamental to the U.K.’s economic performance, small businesses are driving societal change. It’s actually one of their top priorities: 81% of alumni told us that social and environmental factors influence their daily decision making.
Take for example, Kathy Caton, founder of Brighton Gin and 10KSB U.K. alumni, whose business is on track to becoming carbon-negative. She aims to limit their carbon footprint at every step of the production and distribution lines, from completing all of their local deliveries via a specially branded e-cargo bike, to using bottles made up of 85% recycled glass. Kathy and many of the other entrepreneurs we spoke to are leading the way when it comes to sustainability because they believe it’s essential for businesses to combine profit with purpose.
To find out more about how small businesses in the U.K. are driving growth, read the 10KSB U.K. impact report, Engines of Growth.