The pandemic-induced lockdowns wreaked havoc on small businesses. From a slump in sales to inventory pileups, small businesses suffered huge losses.
Now, as the markets are opening up and the economy is gradually recovering, the future of small businesses is still in question.
Even after these uncertainties, SHRM terms COVID-19 as a ‘big driver of innovation.’ With limited options and strict regulations imposed on distribution; businesses had to think out-of-the-box to overcome the economic havoc.
Liz Supinski, SHRM’S Director of Research Products, said,
“For the whole world of work, this has been a large, uncontrolled experiment in changing what work looks like. It’s opened the door to a lot of ideas that have been dismissed because change is hard. And if things are good enough, then why would you change?”
An SHRM survey found about 75% of business people believe they’re better prepared for any future event like the pandemic.
It also revealed that 43% of the business owners pivoted their business model to adapt to this paradigm shift. This indicates a positive sign for the upcoming future of small businesses across the globe.
Here’s what the future of small business holds and the qualities needed to survive:
Qualities of Businesses that Survived the Pandemic
The pandemic saw a downward shift in the number of businesses active worldwide. Nearly all companies of various sizes saw demand and sales take a huge hit.
Health concerns decreased employee shifts, and strict policies forced many small businesses to shut down operations during the coronavirus outbreak. In short, the pandemic hit small businesses hard and put their future in jeopardy.
As per a report from NCBI, over 3.3 million businesses were inactive between February and April 2020, depicting a decline of 22%. However, to stay in the game, many businesses accelerated digital adoption and rewired their strategies.
They turned towards products in higher demand and shifted their business online.
Here are some common traits utilized by small businesses that sustained growth despite the pandemic:
Flexibility in Strategies
The pandemic was an opportunity for small businesses to test their business strategy. When major regulatory policies became effective, small businesses with a flexible strategy were able to keep afloat.
For example, contactless delivery, online payments, delivery options, and home-shopping enabled businesses to serve customer demands.
Additionally, some companies revamped their staffing policies to ensure employee safety. These measures, however small they seem, boost employee trust and help businesses in riding economic slumps. All this can happen only if your business is flexible to accommodate sudden changes in the marketplace.
The future of small businesses will reward an organization that prioritizes communication inside and outside the organization. Effective communication will be the main differentiator between a struggling business and a successful one. Transparent and precise communication builds trust.
It’s essential to be transparent about what’s happening within the organization. It increases the confidence of customers as well as workers.
Small businesses that thrived during the pandemic leveraged digital channels to communicate with the stakeholders periodically. Social media, newsletters, etc., can help share your messages with your audience effectively.
Diligently following your social responsibility as a business owner is essential. It’s as simple as working towards the best interest of society and still serving your business.
Your social responsibility efforts also help improve brand perception and positively affect your business reputation.
The pandemic has brought about a perspective change in people. Now, they value how businesses are prioritizing society interests.
Businesses can become more socially responsible by ensuring strict hygiene protocols, mask mandates, and social distancing. Ensuring employee safety, keeping customer needs in mind and responding with innovative solutions, and pivoting quickly to digital engagement and processes, not only impacted sales but improved brand perceptions.
Creativity and Innovation
Creativity is the secret ingredient to stand out in a crowded market. While a fraction of small businesses were already using creative and innovative ways to attract and delight customers, the pandemic has forced business owners to experiment more.
Being a forward thinker can give you an edge over your competitors. It also enables you to solve your customers’ problems from a new lens. Many small businesses have refined their supply chain strategy using creative ideas to navigate through pandemic-induced difficulties.
Businesses are reducing supply chain costs by focusing on lean manufacturing, offshoring, and supplier consolidation.
So, even if you’re a brick-and-mortar company, think about how you can integrate the latest technology into your physical store as a part of your customer success strategy.
How Will Businesses Change in the Future: 4 Aspects Depicting Future of Small Business
Small businesses have suffered a big economic impact from COVID-19.
Stats show that post-pandemic, one in five SMBs were inoperational—19% closed temporarily and 1% permanently.
Further, 82% of business owners are concerned about changing business dynamics in the post-pandemic era.
However, there is a silver lining; some strategic tweaking and policy changes have helped many small businesses recover.
Here’s how small businesses are changing to prepare for a better future:
1. Adoption of Remote Work System and Employee Safety
At the onset of the pandemic, businesses adopted remote work to ensure the safety of employees and management.
After experiencing remote work benefits, businesses are integrating this system into their daily operations. Businesses are aligning towards hybrid working models, while some have gone 100% remote.
This offers new opportunities for businesses to hire and retain global talent. Further, employees also accept that remote working has increased their productivity and work-life balance (survey).
Startups are leading this trend by offering perks and support to their remote workers.
Prithwiraj (Raj) Choudhury, Associate Professor at the HBS, sums it up:
“Remote companies have well-established processes where people are socializing, and no one is feeling isolated and falling through the cracks. That’s really important right now, especially with all the anxiety around us and schools getting closed and the fear and psychosis of the moment.“
2. Improving IT Infrastructure
IT infrastructure is always crucial for businesses of any size. But with the increased adoption of remote work, the future of small businesses will see a rise in IT/technology investment.
Statistics suggest that such investments are expected to reach 4.2 trillion U.S. dollars in 2021. The wider integration of remote work practices has resulted in the wider adoption of IT/technology.
Further, employers have revamped their cybersecurity policies to ensure the database remains secure. Tech businesses have started educating employees on safety protocols, SOPs, and how to report issues.
3. Improving HR Operations
Effective virtual communication also improves transparency regarding business decisions between stakeholders.
It helps in maintaining open dialogues between relevant parties to create an integrative workplace. Creating authentic communication inside the business will also improve brand reputation.
Michael Beer, co-founder, and Director of TruePoint Partners, shed some light on revamped HR strategies:
“The coronavirus challenge demands an organization-wide, honest conversation that enables truth to speak to power about the corporate response to the challenge. Think of it as a new strategic initiative facing huge execution challenges.
The coronavirus challenge, like any crisis, provides senior management a huge opportunity to develop a trust-based culture rapidly or, conversely, if not handled with an organization-wide honest conversation, to undermine their ability to develop a trust-based culture for years to come.”
4. Digitization of Payroll Service
As of 2019, 93% of U.S. workers were accepting direct deposits of payments. Now, with the adoption of remote work, remaining small businesses and employees have started accepting direct deposits. This new payroll system is beneficial for both employees and business owners.
For business, it increases efficiency and control for payroll processing, eliminates bookkeeping fees to increase cost savings, and produces manageable reports.
For employers, they can access the payment directly and distribute it to other accounts immediately.
Of course, digitization of payroll systems can only be done through automatic attendance and time logs.
More small businesses will gradually switch to time tracking software that record hours worked, time off, and other time-tracking capabilities that impact payroll funds.
This will also help businesses to audit staffing needs. For instance, you can look at the reports and see which employee is working overtime and needs staffing in the team.
The Future of Small Business is Optimistic
Even amidst chaos and uncertainty during the pandemic, many small businesses sustained growth.
Seeing opportunity out of adversity, business owners and entrepreneurs are hopeful about the future. The pandemic has proved to be a test for operational efficiencies and flexibility of businesses.
Thus, those businesses that tweaked their strategies and adapted the changes will sail onwards in the future.