SMEs moving from survival to growth in 2022

Authored by Aviva

Aviva’s annual SME Pulse survey found that the top focus for SMEs this year, as they emerge from the pandemic, is survival (32%), followed by workforce retraining and upskilling (23%) and business resilience planning (22%). More than a third (38%) of SMEs plan to increase their online sales but digital adoption comes with a warning - 51% of SMEs are concerned about the risk of cyber-attacks.

Small-to-medium enterprises (SMEs) are prioritising survival and hoping for growth as they increasingly move online in 2022, with resilience planning, cyber security and workforce upskilling coming into focus.

The survey of more than 500 SMEs found that 37% of businesses expected to grow, driven in particular by the manufacturing sector where growth expectations were reported by 56% of respondents. Many businesses (41%) expect to stay the same size in the next 12 months, representing approximately 2.1m businesses. Not all businesses were as optimistic, with 13% expecting their business to reduce in size and 2% expecting to close.

22% of businesses are looking to make sure their businesses are better prepared for the future by including business resilience in their plans. This was highest in construction and real estate as well as the retail and wholesale industries with 30% of businesses selecting it as a priority followed by charities (26%) and the public sector (23%).

The shift to home working, driven by the pandemic, shows no signs of reducing. More than eight in ten (84%) SMEs confirmed that they plan to work from home as much or more than last year.

Digital focus grows and home working to stay

When SMEs were asked about the changes they had lined up for 2022, 38% said their plans included a move to increasing online sales and presence. Accelerating online was a particular focus for those SMEs in retail and wholesale, where 59% of businesses listed it as a priority. This was closely followed by a plan to increase digital processes, which is in the plans of 35% of respondents. The charity sector in particular is planning to implement more digital processes, with 54% of small-to-medium-sized charities confirming plans to ‘go digital’.

Online risk awareness and cover

Half (51%) of SMEs said they are concerned about the risk of cyber-attacks on their business, 8% significantly so. These fears appear to be driven by experience, with 13% (potentially 725,000 businesses) of SMEs saying that they have suffered a cyber-attack and 10% that knew of a business that had. Furthermore, of those SME owners who had experienced or knew of a cyber-attack, two-thirds (66%) indicated that this had happened more than once.

One-third (33%) of SMEs surveyed responded that they have cyber cover. The number of SMEs with cyber cover has doubled since last year, when only 14% of SMEs said they had a cyber policy. The number of SMEs with cyber cover grows to 42% for those businesses that are planning to increase their online presence.

Gareth Hemming, Aviva Chief Distribution Officer said: “SMEs continue to demonstrate incredible adaptability and resilience during the pandemic and, as we hopefully move into a post-pandemic period of growth, we believe this will continue. The move to increase online presence and digital processes brings an increased risk of cyber-attacks – at a time when businesses can ill-afford further disruption.

“It is good to see the level of cyber cover increasing, particularly amongst those businesses who plan to increase online or digital activity, but this still leaves two-thirds of businesses exposed to rapidly evolving and varied methods of attack.

“It is encouraging to see that business resilience planning is one of the top focus areas for SMEs this year. The old saying ‘prepare for the worst and hope for the best’ is relevant now more than ever and we have a raft of risk management tools to help brokers work with businesses to do this. We believe Brokers play a critical role in advising SMEs of their options and making informed choices about the cover they need, to this end we are investing in additional levels of support for brokers across the UK making it easier for them to access our Underwriters and risk managers.”

“As ever, it is crucial that businesses engage with their broker to be certain that they are not simply resilient to the risks they face going forward, but that they have cover in place to protect them from the risks they cannot control.

Cyber insurance from Aviva

As more businesses digitise their business, cyber threats are increasingly becoming a key risk and although the number of businesses with cover has increased, there are still many that are left exposed.

To respond to the ever-evolving risk, we enhanced our cyber product last year. We can accommodate a wide variety of businesses and offer indemnity limits ranging from £25k to £2m with independent limits applying to First and Third Party cover, enabling you to protect your clients’ businesses with a clear, comprehensive solution.

And in-line with your feedback, we launched the product online via Fast Trade and Acturis eTrade as well as our regional branch network so you can access one policy wording, however you choose to trade.

We have a wealth of material to support you in your client conversations about cyber risks including:

• Cyber Playbook
• Our Cyber Proposition overview
• Reasons why your clients should consider cyber cover

And you can access client-facing videos featuring our Senior Cyber Underwriter, Alana Muir, as she reveals the common misconceptions she often hears from SMEs about their cyber risks through Broker Create by logging into Broker Mentor.