It is hard not to talk about 2020 without reflecting on the dominant and disruptive influence of the COVID-19 pandemic. Few enterprises have managed to escape the wide-ranging impact of the virus as many business owners have looked for ways to adapt to the ‘new normal.’
At Hitachi Capital Business Finance we have noticed how resourceful and resilient many small businesses have been during an unprecedented time. Whilst some have looked at the norm - the average business reaction – we celebrate difference and the diversity of the market today. And it is at times of intense pressure when we see specific groups reacting and adapting in different ways. This is key to understanding the small business market in its fullest sense.
This edition of Hitachi’s ‘audience in focus’ insight series looks at how the UK’s most traditional family small businesses have steered their companies and employees through the COVID storm. This new snapshot report is based on research we conducted in July 2020, a key time when smaller companies were re-emerging from lockdown and giving thought to adapting, rebuilding and – for some – growing their enterprises.
Maintaining the human touch
Planning ahead has been challenging as businesses re-emerged from months of lockdown. Four in five family-owned small businesses (80%) said they had to modify their business plans to adapt to a changed market. Significantly, their top priorities related to making the workplace safe and looking after their people. Overall, 29% prioritised adapting the layout of their premises to new social distancing/public health guidelines. A further 27% were doing more customer client liaison online and 25% made plans to re-skill and retrain staff. Whilst many other small businesses prioritised product lines and exploring new markets, for family businesses it was about the safety of their people and maintaining a strong connection with key customers: The human touch.
Family businesses also emerged as those enterprises working the hardest to avoid the painful process of letting people go. With many expecting the Government’s job retention scheme to end in October, our research suggested that one of safest places to be if you wanted to keep your job was to be employed by one of the UK’s oldest and most traditional small family enterprises. Almost half of small business owners (46%) overall predicted no reduction in headcount for the rest of the year – rising to 56% for family-run small businesses. In some instances, keeping staff on the payroll has come at a personal cost for these employers, with almost a quarter taking a pay cut so that staff wages could be maintained. In-fact a significant 77% of family-run small business owners proactively tried to avoid making employee cuts over the period of lockdown. Four in five (80%) of SME owners from family-run enterprises have also tried to reduce the day-to-day running costs of the company to protect staff.
The extraordinary levels of commitment from family business owners to protect jobs resulted in them anticipating lower levels of job cuts by the end of the year – at just 7% of their overall workforce. Significantly, these figures have nothing to do with making pragmatic decisions based on cash flow, as family business owners reported a steeper decline in turnover for the year – a fall of 34% compared to a national average of 30%.
Our study has shown that protecting the workforce has been of top concern for many smaller companies since emerging from lockdown - a third of decision makers from family-owned businesses (33%) have re-arranged their office/workspace to ensure people can work safely at a social distance. Some of the key staff safety measures have included: closely following PHE guidelines (32%), introducing new flexible working hours (31%) and having plans in place to continue to keep some staff members on furlough (28%).
Mr and Ms Motivator – supporting health & wellbeing in the workplace
In these challenging times it is important for all companies big or small to support a more open conversation to raise greater understanding of how wellbeing can be assisted in the workplace and at home. Our research shows small businesses have taken the task of managing both physical and mental well-being for themselves and their employees very seriously. Keeping staff morale up can be difficult at the best of times, but the simplest acts of supporting employee wellbeing can go a long way in these challenging times. Our new survey results come at a time of growing concerns regarding the mental health of the nation – with figures from the ONS showing that almost two in five adults reporting that the pandemic had affected their well-being.
Our study showed motivating staff and maintaining a happy workforce was high up on the list of priorities for more than half of small business owners – more so for family-run small businesses. When asked about the work environment and looking after staff members since the easing of lockdown, family-run small businesses emerged as those most likely to be taking proactive measures to support the wellbeing of their employees. Main priorities were; introducing flexible working hours (26%), improving sick pay for people isolating/ displaying Covid-19 symptoms (15%), organising motivational team meetings (13%) and initiating one-to-one pastoral calls with employees (12%).
Humour also played its part, 9% of family run businesses have held staff quiz nights online and have hosted zoom calls in fancy dress. Other areas given focus included, employee bonuses (13%), reassuring staff of job security along with the strength of the company (12%) and giving out staff prizes (7%).
Personal health and wellbeing
Independent to looking after members of staff in the workplace, many small business bosses have made wellbeing changes at home – and again this move was led by family-run small businesses. The main areas included; a change in diet, such as cooking more meals from scratch rather than eating ready meals, spending more time in the garden, being more aware of stress, and taking time out of the workday to go for a decent walk.
Joanna Morris, Head of Marketing and Insight at Hitachi Capital Business Finance comments:
"For this edition we have deliberately taken a look at the human side of running a business. Family-run businesses characterise a more traditional aspect of the small business community. Heritage and tradition are often more important values, as is the value placed on long-term relationships over time. Longevity, a sense of dynasty and track record matters more with family-run businesses, who also often have a strong sense of connection with their local community.
"When it comes to growth plans, managing cashflow and looking for business finance, family run businesses have similar priorities to other businesses – but they stood out when it came to prioritising staff welfare, focusing on mental health and avoiding making people redundant. This group stand very much as a role model for others. In the most challenging of economic climates and with hundreds of thousands of people losing their jobs, family run businesses show that creating a positive work environment - where wellbeing and staff retention is prioritised – has a tangible value. It fosters a sense of stability and impacts overall business confidence and growth plans: Keeping calm and carrying on. This may well be one of the reasons why some of the UK’s most traditional businesses have remained calm and considered in tackling one of the most challenging economic periods in recent times."