It’s only been a year since the term ‘coronavirus’ entered our global vocabulary, but for a lot of us, it feels like a lot longer. From the grave danger the virus has posed to our public health, to the irreversible damage it’s caused to our global economy, the impact of Covid-19 on UK businesses continues to be profound. However, COVID-19 wasn’t the only thing to shake up the small business landscape in 2020. Brexit negotiations and long-standing shifts in consumer behaviour also contributed to disruptions to the market, and this perfect storm resulted in over 234,000 small to medium-sized enterprises (SMEs) shutting down before the end of 2020.
But it’s not all doom and gloom. The turbulent economic climate of 2020 also forced SMEs to be resourceful. Despite the majority of small businesses making less last year than they have in the years previous, some enterprises used their unique circumstances to rise through the ranks and find success. So, in this article, we’re going to identify five businesses that have defied the odds and thrived throughout 2020, before outlining what valuable lessons can be gleaned through these success stories, to help give your business its best fighting chance for 2021. So, without further ado, let’s jump straight in.
Small businesses that thrived during 2020
Stitch & Story
Stitch & Story is a digital craft brand that sells a range of knitting knits, yarns, and patterns alongside online tutorials that teach viewers how to knit from the comfort of their own home. Established in 2012 by Jennifer Lam and Jen Hoang, the small business caters towards people of all ages and abilities, with one it’s core missions being to bring knitting and crocheting to a whole new generation. Starting out as a modest kitchen-table start-up, Stitch & Story achieved relative success in the years leading up to 2020. However, when the national lockdown was first introduced in March of last year, the small craft brand saw sales increase by almost 1000% at the end of the month, with this accelerating to 1143% in April.
This sudden boost in trade is likely to be due to a combination of factors. With the nationwide restrictions forcing all non-essential workers to stay at home, most consumers across the country were suddenly left with a lot of increased leisure time. This, along with a surge of interest in new activities, and fears of scarcity leading to stockpiling and panic-buying provided fertile ground for the growth of stay-at-home friendly craft activities. Perhaps most crucially, the series of online tips, tutorials and videos that Stitch & Story offered on their platform chimed with the growing internet use of consumers, at a time where adults in the UK were spending more than a quarter of their waking day online.
When asked by the BBC what they thought was behind this sudden spike in sales, co-founder Jennifer Lang commented, saying that crafting is essentially perfect for the times: it helps people to disconnect from their phones and the screens that can take over quarantine life. Taking a break by crafting or crocheting provides a simple break from electronics, and may even be therapeutic.
Due to the national stay-at-home measures, Stitch & Story have been carrying out their operations remotely since March, and are keeping their team connected through digital software such as Slack, Google Hangouts, Zoom, and Skype. Far from letting this slow them down, however, the business is still continuing to thrive, and due to their record-surpassing sales throughout the pandemic, they recently received an additional £1 million investment from the venture capital trust Pembroke VCT.
Another online retailer that shot to success in 2020 was Bookshop.org. The platform, which was launched to a US market early in the year and brought over to the UK in November, supports local independent bookstores by selling their books and allowing them to create their own virtual shop front on their site. They give each partnered bookshop 30% commission on the sales that are made on the site (the same as what they would receive in their brick-and-mortar shops), and a further 10% of all sales made on the platform is divided up and allocated amongst all the participating bookshops. Bookshop.org and it's distributor partners cover customer service and delivery, and, due to the competition from larger retailers, they aim to have all products sent out within two to three days of purchasing.
Dubbed as the "indie alternative to Amazon'', Bookshop.org was set up in January of 2020 by the co-founder of Literary Hub, Andy Hunter. The site was initially rolled out with 250 participating American bookshops, but due to the impact of the coronavirus pandemic, the number of partnered shops quickly accelerated to 900. The site went from selling $50,000 (£38,000) worth of books throughout the whole of February, to $150,000 (£110,000) a day in April - with the interest reaching a peak in June when they sold $1 million (£730,465) of books in a single day. After this success, Bookshop.org was then brought over to the UK ahead of time, where it is currently partnered with over 130 independent book shops.
When asked about this experience by The Guardian, Andy Hunter commented that, within the first five weeks of what was speculated to be a period of growing pains for the business, the pandemic hit instead- plunging Bookshop.org into massive success and business.
Aside from the clear influence of the pandemic, what else is likely to be behind Bookshop.org's seismic success?
Something that separates Bookshop.org from the rest of the market, especially its competitors, is its socially-conscious ethos. Since the platform seeks to support independent bookshops that are threatened like massive tech conglomerates like Amazon, it appeals to ethical consumers who are passionate about books and the industry that supports them. As Hunter himself has stated, "people love bookshops" and 'they want to emerge from this pandemic into a world where bookshops still exist". Therefore, by providing a grassroots alternative to bigger corporate players, and pairing it with an immersive virtual experience (as well as fast and convenient delivery), it really is no surprise that Bookshop.org has taken off in the way it has.
Described as the 'Airbnb for businesses' Occypyd is a marketplace that connects individuals and businesses to companies with available workplaces for hire. Launched in 2018 by Edinburgh-based entrepreneur Callum McPherson, the platform initially only catered to kitchen owners who were looking to rent out their space to deliver companies like JustEat and Deliveroo. For example, cafes that closed at 4 pm could advertise their kitchen space via Occupyd, and temporarily lease out space to entrepreneurs or business owners looking to make some after-hours income.
Throughout the first national lockdown, the service then expanded to 'anyone who had space that they were not using to their full capacity'. So, in addition to catering companies, the platform became available to those looking for office space, and even vacant chairs in hairdressers and salons. Due to this expansion, Occupyd's use skyrocketed, and the site helped thousands of users whose businesses have been impacted by government restrictions and stay-at-home measures by helping them to find new sources of revenue.
Occupyd success is primarily owed to the explosion of the food delivery market throughout the coronavirus pandemic. In March 2020, online food delivery was among the fastest-growing industries, with the segment up 11.5% from the same time the previous year. But, in addition to this, due to the precarious economic situation the virus propelled many people into, Occupyd responded to a particular zeitgeist of the time, by facilitating the sharing of flexible workspaces while encouraging entrepreneurial spirit.
When quizzed by the Independent about his company's future, McPherson appeared confident with its upward trajectory, stating that 'the need for our service is just going to grow and grow because of the economic conditions the pandemic is leaving us with'. As for his future ambitions, Occupyd is looking to expand its tech team and customer support team in a bid to try and keep up with the ever-increasing demand. Following the start-up's incredible success on home soil, McPherson is also looking to expand its services to a US market in 2021, with the end goal of listing 10,000 spaces on the platform by the end of this year.
Much like Covid-19 induced a spike in online food delivery, throughout 2020 alcohol delivery services also enjoyed their time in the sun. Nothing exemplifies this more than the landmark success of online wine and spirits retailer, Laithwaite's Wine. Far from being a new enterprise, Laithwaite's Wine was founded in 1969 by Tony Laithwaite. The business started off by Laithwaite lugging local wine from Bordeaux to the UK during his summer holidays as a student, and it now delivers millions of pounds worth of wines to customers across the country.
Despite fairly healthy profit margins at the beginning of 2020, coronavirus dramatically boosted the business of the online retailer, with Laithwaite Wine almost doubling their number of sales in March and April compared to the year before. Throughout this time frame, the company's customer base also increased by a whopping 300%, and prosecco sales shot up 117%. But what's behind the wine retailers success?
Due to national pub closures and widespread stay-at-home orders, part of Laithwaite's sudden boost in sales is undoubtedly due to people being forced to bring the party to their bedrooms. From weekly Zoom quizzes, to DJ live streams, 2020 introduced new ways of socialising for many of us, and Laithwaite's wine was able to tap into this market. As Mr Stead, Laithwaite's company spokesman told the BBC, Laithwaite’s wine believes people are able to find a sense of community by drinking together- even if it’s at a distance, solidarity can still be found within a shared love of quality goods.
Additionally, Laithwaite's partnership with delivery service Yodel enables their packages to be delivered in less than three days, while also providing the customer with regular updates on their delivery. This fast and convenient delivery option positions Laithwaite's Wines above other competitors with slower delivery times. Additionally, in a time where in-person shopping is regarded to be less safe than purchasing through the web, it's likely that the online retailer also chipped some profits away from some of the larger supermarkets in the UK.
Just like how 2020 saw an increase of alcohol-based home deliveries, it also witnessed the rise of some more wholesome activities - like permaculture. From people kitting out their bedrooms with potted plants, to allotment owners finally giving their patches some love, the sudden growth in leisure time in 2020 encouraged a lot us to dust off our green fingers. One start-up that jumped on this gardening trend was Pot Gang.
Founded amidst the first national lockdown by Sam Smith, Pot Gang offers a monthly subscription service that sends out boxes containing different types of seeds, pots, compost, as well instructions that explain how to bring it all to life. Catered towards young urbanites who lack outdoor space but are still looking to grow fruit, veg, and herbs from home, the idea behind Pot Gang came to Smith when he realised lots of his friends struggled with growing or maintaining plants. The concept clearly resonated with the broader population, since the business continued to grow throughout 2020 despite the dismal outlook for most small businesses across the UK. But what stands behind Pot Gang's overnight success?
When asked by the Metro, Sam Smith suggested that Pot Gangs triumph was, in part, due to a growth in self-care practices, commenting that 'It’s therapeutic, growing stuff around you’ and that ‘lockdown has been a blessing’ since ‘more people decided to take care of their mental health and do things that make them feel good’. Smith also believes the SMEs success could be due to the lack of variation that’s currently available in UK supermarkets, mentioning the lack of choice most consumers confront: only one or two types of vegetable or fruit, despite the numerous different flavours and strains in the world.
Whatever Pot Gang’s primary reason for success may be, it’s clear the business responded to a much broader trend towards gardening and sustainable giving. And for those considering starting their own business during the pandemic, Sam Smith advises that by keeping your ear to the ground, persevering, and creating something that fills a gap in the market, you may just find success.
What can we learn from these businesses?
So, now we’ve looked at five businesses who appeared to defy the odds in 2020, what is there to be gleaned from their successes? Here are our four main takeaways.
Customers are becoming increasingly socially-conscious
As showcased in the businesses successes we’ve just looked into, in addition to receiving their share of positive karma, companies who openly practice social consciousness are also likely to have higher brand favourability. The public has been showing an interest in more ethical forms of consumption for a while now, and this trend only appears to be accelerated by the coronavirus pandemic.
As this report shows, one way that consumers are being socially conscious is by trying to support local and independent businesses. Due to the devastating impact of Covid-19, many high streets around the UK have been pushed to near breaking point. With signs of recovery appearing to be slow, individuals seem to be harnessing their collective consumer power to support businesses that are struggling within their local community. As the report shows, throughout 2020, 60% of the consumers surveyed expressed an interest in shopping locally, compared to only 40% of shoppers in 2019. This provides a promising indication to independent businesses in 2021, and it also explains the growth of platforms like Bookshop.org that are set up to help smaller retailers.
In addition to this, businesses that respond generously to current emergencies, like Stitch & Story who offered daily free knitting kits by asking their fans to nominate an NHS hero, are much likely to receive greater favour and attention from their consumers. And, in a time as unprecedented as the current day, we all benefit from giving a little bit back.
Fast delivery is essential
If there’s anything else to be learnt from these four success stories, it’s that fast and convenient delivery is essential for small businesses who are looking to gain a competitive edge. Since Amazon first rolled out their next day delivery service to the public in 2015, the retail delivery game has never been the same. In the online marketplace, customer expectations now revolve around affordable, reliable, and speedy shipping services, and (much like the rise in ethical consumption), this is also a trend that has been accelerated by the pandemic.
Covid-19 dramatically changed the way we shop. Due to the temporary closure of non-essential brick-and-mortar shops among fears of transmission, 2020 forced most of us to move a lot of our shopping habits online. To be specific, throughout March of last year, e-commerce transactions accounted for a record high of 22.3% of all total purchases in the UK. While this boom in online retail has increased the demand for lots of smaller businesses, it also raises the expectations of consumers.
So, it’s likely that a contributing factor behind Stitch & Story, Laithwaite’s Wines, and Bookshop.org’s successes is the fact that they all committed to delivery times of less than three days. Additionally, lots of the businesses that we’ve mentioned also provided the customer with regular updates and the option to make parcels trackable. Therefore, to make your business competitive in this current landscape like some of the ones we’ve mentioned in this article, it’s essential to commit to quick and reliable delivery.
An online presence is necessary
Another consequence of people spending more and more time online in 2020 is that, in order to reach their customer base, businesses are required to have a strong online presence. All of the companies that we’ve addressed throughout this article offer a slick online platform to their customers. Some even go above and beyond to make the retail experience even more appealing. For example, by allowing bookshops to create their own virtual shop front on their site, Bookshop.org gives consumers an even more immersive experience. Also, by offering online tutorials to those who buy their products, Stitch & Story make it much easier for people to knit along at home.
In addition to allowing your services to be conveniently reached from people's homes, building and maintaining a presence on social media is a fantastic way to keep an open line of communication between you and your customer base. In a period where people are spending so much more of their time on social media, reaching out to customers on platforms like Instagram, Facebook, and Twitter is essential if you want your brand to remain relevant. Also, aside from this, social media is a great way to gather customer feedback and a useful tool to inform the public about any developments that are taking place in your businesses.
It’s smart to respond to emerging trends
In order for businesses to truly thrive, they need to adapt to the changing needs of the current market, and nothing has displayed this more than the unexpected events of 2020. Since coronavirus and the subsequent associated stay-at-home measures switched up our daily routines overnight, if businesses did not respond to this new reality, they were put at risk of becoming obsolete. So, if you’re looking to build a business up from scratch, or improve the demand of an established one, being flexible and keeping an eye on shifts in the market is the best way to stay ahead of the trends.
A great example of a business which did this is Pot Gang. By tuning in to the needs and interests of his peer group, founder Sam Smith was able to launch a successful company, in a time where COVID-19 was forcing a quarter of UK businesses to close their doors. Similarly, Occupyd’s success in 2020 was also due to the businesses responding to the needs of the market, by opening the site up to other types of workspaces. Lastly, this proactive approach was also adopted by Stitch & Story and Bookshop.org- who both were able to increase their profits by aligning themselves with the public's newfound growth of leisure time.
However, due to the challenging climate of 2021, even if your SME focuses on taking all the right steps, there’s still no guarantee it’ll be able to turn a consistent profit. So, if you are one of the many whose business is in need of some financial support, MarketFinance is here to help. We provide businesses with interest-free, government-backed loans for the first 12 months, to help your SME weather the storm until business begins to pick up again.
For more information on what we do at MarketFinance, or for more financial and business guidance for you SME, visit us at our site here.