Second quarter revenue boost fuels further optimism

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Small and medium businesses have exceeded their revenue predictions for the second quarter of this year, according to The latest Barclaycard Payments’ quarterly Barometer.

At the start of April, SMEs predicted a 28 per cent decline for the quarter, but now that Q2 is in the books, the research reveals an average reported loss of 14 per cent.

This Stronger-than-expected performance has led to a boost in optimism, with index scores jumping from 79 out of a possible 200 points at the start of Q2, to 95 points at the start of Q3.

This is also reflected in business outlook – 36 per cent of SMEs report a positive outlook for their own business this quarter, up from 21 per cent in Q2. Across all sectors, SMEs predict a five per cent increase in revenue for Q3 compared to Q2, which grows to 14 per cent over the next 12 months.

See also: Most firms say recovery is on the way

Sectors that rely on consumer card payments, such as hospitality and leisure, were hit particularly hard in Q2, and many were not able to re-open safely until the start of Q3.

Fortunately, these sectors appear to be recovering well. Barclaycard SME transaction data for the first half of Q3 has shown consistent week-on-week growth, and the average daily transaction value has risen by 60 per cent compared to the daily average for Q2.

Despite uncertainty and business disruption, SMEs are outperforming their own revenue expectations and beginning to look to the future

However, card transactions for the first half of Q3 remain 13 per cent behind the same point last year*, indicating card-taking SMEs have a way to go to match their pre-pandemic performance.

The percentage of SMEs reporting coronavirus negatively impacted their business has dropped this quarter, falling from 82 per cent in Q2 to 74 per cent this quarter.

While the pandemic continues to cause disruptions, with 60 per cent of SMEs expecting it to have a significant impact until at least the end of September, the future looks more positive – that number drops to just 13 per cent by this time next year.

SMEs are also proactive in their own recovery – 80 per cent plan to invest over the next 12 months, with new equipment & technology (32 per cent) and marketing (28 per cent) the greatest focus.

Rob Cameron, CEO, Barclays Payments, says, “SMEs are once again proving their resilience and securing their role at the heart of the UK economy, especially in the face of the challenges posed by coronavirus. Despite uncertainty and business disruption, SMEs are outperforming their own revenue expectations and beginning to look to the future by returning to work and thinking about investment.“

The biggest change SMEs have implemented to mitigate the effects of coronavirus is reducing staff numbers (26 per cent), which rises to 47 per cent amongst medium businesses. 

This is a huge testament to their resilience and their willingness to seek and take advice

The top benefit of coronavirus reported by SMEs was also related to staffing – with a third (33 per cent) welcoming the opportunity to improve remote working capabilities.

Many SMEs can see life returning to how it was before coronavirus, with 42 per cent expecting a return to ‘normal’ at some point, and a further 31 per cent saying that the reason they won’t return to normal is because they have made small changes and improvements that they intend to keep.

Emma Jones, founder of Enterprise Nation, said: “We’ve seen SMEs begin to emerge from lockdown in a place of strength – a huge testament to their resilience and their willingness to seek and take advice. It’s heartening to know that the Government support measures and resources have helped our nation’s small businesses during the pandemic.”

Ryan Demaray, Managing Director SMB EMEA at SAP Concur, added: “It is really positive to see that small businesses in the UK defy expectations during this difficult time. SMEs really are the driving force of the UK economy and it’s crucial they have the tools they need to succeed. Access to the right technology is one the most important ways for SMEs to get ahead, so it is good to see that many plan to resume investing in this area soon.

“Unfortunately, many SMEs view some technology as more for larger enterprises than themselves, which can really hamper progress. Digital transformation, specifically automation, is one area of technology that can really benefit SMEs, by removing the need for menial tasks and increasing productivity, but misconceptions about it often means SMEs think it’s not an option for them.”