There’s no denying that 2020 resulted in businesses facing unprecedented challenges. Various issues impacted different businesses across the board – from concerns about generating revenue to fears for staff mental health.

The Business Demystified survey*, highlights the challenges small businesses encountered in 2020 and the issues they predict they’ll face in 2021. The research collected data from 1,000 SME business decision-makers in the UK.

This article shines a light on the key findings from the research and what the future looks like for SMEs, according to the entrepreneurs that run it.

Although their ability to drive revenue was business leaders’ overall biggest foreseen challenge (38%), the mental health of their employees followed closely as one of the most pressing issues for 2021. Nearly a third (31%) stated that they were worried about their workers’ wellbeing. These concerns have increased due to remote working, redundancy fears and juggling work and parenting, which has affected many employees in the UK.

According to the research, mental health and wellbeing was the biggest foreseen challenge for many business leaders, but mostly for those working in the education, charity and energy and utilities sectors.

From the charity organisations that responded, nearly half (43%) listed mental health and wellbeing as the key challenge for 2021. This is unsurprising, as around a third (33%) of charities were forced to reduce their workforces, while 35% turned to government relief schemes, such as furlough, to prevent further financial losses.

As these industries deal with the impact that a lack of job security has on employees, other sectors have fears around the effect of overworking employees due to increased demand will have on their companies.

Nearly half (45%) of accountancy, banking and finance sector clients predicted staff retention would be one of the biggest difficulties they would face during 2021.

On the other hand, the hospitality and events industry battled with lockdown restrictions, rendering them unable to operate for most of the last year. These businesses were therefore primarily concerned with the risk of closure.

As 2020 became the year of working from home, the biggest challenge perceived by businesses due to remote working was the IT infrastructure (16.5%). With more businesses reliant on technology to keep teams connected and ensure work continued to be delivered, the need for hardware and new software increased while working from home.

Following this challenge, the second biggest WFH concern for SMEs was people management (16%). In fact, accounting, banking and finance corporates was the sector most likely to experience issues with productivity and maintaining morale – and also the sector most concerned with staff retention. The two are very possibly linked.

Despite the challenges they’ve predicted, SMEs are looking to prepare better for 2021 and beyond. As employee mental health ranked highly for professionals who foresee it to be the biggest challenge this year, they are making it a priority to tackle this issue.

In a year where roles have been fulfilled in isolated situations, work-life balance has been left skewed and concerns about livelihood continue to plague many industries, it’s no surprise that business leaders are concerned.

Other predicted challenges for 2021 include:

• Customer retention – 28%
• Risk of closure – 26%
• Staff retention – 24%
• Employee development – 21%
• Revenue forecasting – 21%

To deal with the implications of the pandemic, businesses looked at upskilling and seeking advice to ensure they were prepared for the continued challenges.

As a drop in revenue was one of the biggest hurdles faced by businesses, almost 41% of UK SMEs took part in government schemes to prepare for the impact. 37% even turned to the government in times of crisis, seeking advice from the different services available to help.

To diversify skillsets, almost 40% of business leaders planned to upskill in an area outside their original expertise. Accounting, banking and finance businesses (59%) along with IT (56%) were most likely to spend time refining their skills in external industry areas.

Business, consulting and management enterprises worked quickly and proactively to counter the challenges they faced as a result of the pandemic, with 41% expanding their services to continue generating revenue. This industry also remained the most optimistic about the year ahead.

Despite the challenges they faced with staff retention concerns and employee productivity, the accountancy, banking and finance industry (61%) also topped the list as most positive about 2021.

*Commissioned by business insurance specialist Hiscox