Recent report reveals 4 in 10 small business owners are trying to adapt to current economic circumstances

Small business owners in the United Kingdom feel that thinking outside the box generates more than a third (36%) of their revenue.

According to PayPal's Business of Change Rethink & Grow report, four in 10 (43%) small and medium-based enterprises (SMEs) owners believe adaptation – the trying and testing of new processes and ways of doing business – is vital to success.

PayPal's report, which surveyed 500 small business owners across the UK, reveals that more than three quarters (77%) of business owners believe it is important for SMEs to adapt their operations to remain competitive during changing and challenging market conditions. However, the report pointed out that nearly half (47%) of SME owners admit to not thinking about how they could approach their business differently.

To navigate the current economic conditions, SMEs are exploring various strategies to stay afloat. The top ways identified in the report include selling through online marketplaces (26%), selling via social media (24%), investing in digital platforms to improve customer experiences (21%) and finding new markets abroad (18%) are some of the top ways SMEs believe they can stay afloat in the current economic conditions, according to the report.

Other suggestions include keeping a closer check on all outgoing expenses (34%), setting aside more time to think differently about their business (31%), and enhancing overall customer service (31%).

Concerns persist throughout the remainder of 2023 despite aspirations to succeed. As the cost of living rises and the aftermath of the COVID-19 pandemic lockdowns hit UK firms, six in 10 owners (62%) agreed that 'survival' was their top priority for the rest of the year. More than half of the owners polled (58%) were anxious about their company's income and trade for the rest of 2023. But it's not just the economy that's slowing down small enterprises.

Other major considerations are being able to reimagine their company potential if their processes and digital platforms were streamlined and optimised (59%). The amount of distinct operational and financial systems required to manage their organisation (54%).

Examples include payment systems for clients, payment systems for SMEs, fraud protection, and corporate insights and analytics. Experiencing more obstacles than planned when establishing their business (30%).

Furthermore, Paypal expressed concerns about finding the proper people to help enact new operations (22%), a lack of finances to make investments (21%), and general self-doubt (20%) are some of the most significant challenges for SME owners to explore new ways of working.

When it comes to factors that may limit small business success, the report found that more than a third (34%) of SMEs still do not have a website for their company, nearly a third (28%) do not have their own social media channels, and 47% do not sell their products and services on online global marketplaces, allowing them to sell globally.

Despite this, SMEs' aspiration persists, with them being optimistic about their potential. The study revealed that 70 per cent of small business owners believe their company will realise its full potential. Over three-quarters (77%) of owners also indicated that it took their company more than a year to see benefits and success.

Along with spending, SMEs identified some of the best methods for customers to support the small business community. Spreading positive experiences through word of mouth (51%), submitting online reviews (48%), and sharing and participating with small companies via social media (42%), are all forms of support.

Looking across the UK, SMEs in big cities such as London and Manchester name their high-quality products and services as the most beneficial element to their business (43% and 54%, respectively).

Other parts of the UK have benefited from a strong social media presence, with the biggest number of SMEs in Portsmouth (50%), Aberdeen (40%) and Edinburgh (40%) claiming it has helped their firm.

Vincent Belloc, Managing Director of PayPal UK acknowledged that small businesses are fighting multiple battles in these difficult times. He expressed his hope that PayPal's latest findings motivate owners to reconsider what's possible, allowing them to shift from a survival perspective to a thriving mindset in 2023 and beyond.

According to him, it's concerning to see so many SMEs stifled by managing too many different systems in their business, which takes away valuable time and focus. Belloc highlighted the importance of streamlining processes and mentions PayPal's all-in-one digital payment and commerce solutions as tools to assist owners in managing their businesses more effectively.

Finally, he noted that when it comes to expansion, no business should have to take on the burden of managing various vendors and systems on their own – which is why trusted fintech partners are vital.

"Thinking outside the box is critical for any small business," said Fisayo Longe, founder of Kai Collective, a London-based women's modern fashion and lifestyle brand.

Longe, who uses social media to build a community around her brand, believes that even in difficult times, adaptation is crucial for success. She praises PayPal's tools for helping her business grow, even during slow months, and enabling her customers to manage their money better.