15 Apr 2021
by Jonathon Clark

SME Market Research Insights

Working with our member Advanced-UK, techUK recently commissioned some market research looking at how small to medium-sized companies (SMEs) within the UK’s tech sector are dealing with the challenges of the current climate.

Working with our member Advanced-UK, techUK recently commissioned some market research looking at how small to medium-sized companies (SMEs) within the UK’s tech sector are dealing with the challenges of the current climate. 

Challenging the Traditional Narrative 

Out of the 500 SMEs that took part, one quarter had been trading since before 1990. There were upticks in the number of businesses started in periods immediately following recessions, which is unsurprising given the tectonic impact that market pullbacks can have on the labour market. Less than half had investors on board -  there was an almost even split between B2B and B2C and over half identified ‘service provision’ as their primary means of business, with roughly one fifth being hardware providers and one fifth being software providers.  

This profiling information goes against the popular narrative that most tech companies are young, start-up-esque entities producing proprietary software and leveraging large amounts of venture capital. In fact, most of the SMEs within the sector have a strong heritage which has taken a lot of bootstrapping. 

COVID-19 - Tech is not Invulnerable 

There have also been numerous assertions over the past 12 months as to the effects of the pandemic on the tech sector in the context of the wider economy. 45% of the respondents to our survey stated that customer acquisition was a priority for the remainder of 2021, with almost equal numbers (c.26%) identifying restructuring, digital transformation, financing and succession planning as priorities. We went deeper with the COVID-19-specific line of inquiry by asking the companies what the impact has been on their business.  

We performed sentiment analysis on the responses and determined that 40% of SME businesses were negatively impacted, 32% said it was neutral and 26% said it positively affected business. There were a small number of outliers in each direction – a handful saying that COVID-19 signalled the end of the road for their business, with a roughly equal number saying that it had been positively transformative. The cited causes for concern were diminished order books, supply chain disruption and the struggle to make a switch to an eComm-first approach. Conversely, amongst those who saw COVID-19 as good for business, a flexible business model which allowed for remote working, agile supplier management and a diversified customer base. 

A Solid Base for Economic Recovery 

Despite the clear challenges facing many businesses, there are many promising green shoots that provide a hopeful outlook for the coming quarters. One third of respondents are exporters, a third have worked with a University on an innovation project and more than half are re-investing >1% of gross profit on R&D. These are positive statistics that, although they could be improved on, show improvement and progression from where we were as an economic sector in previous years.  

In the coming months, we will be working hard to create new services and opportunities that correspond to the information we receive from market research like this, in addition to the continual input of our members and advisory panels. If you want to input into this, please get in touch.


Jonathon Clark

Head, SME Engagement, techUK