Small businesses are the foundation of our economy, and the fabric of our society. As such, we asked small business leaders how they feel about the state of their businesses and the future of entrepreneurialism. From COVID-mandated restrictions and operational changes, to small businesses anchoring communities and supporting social movements, small and medium businesses (SMBs) have been more top of mind than ever. Let’s take a look at what we learned in 2020 that can better inform 2021.
We surveyed more than 2,300 small business owners and leaders across the globe to answer these questions in the latest edition of our Small & Medium Business Trends Report. What follows are some telling small business trends that grabbed my interest.
1. SMBs are optimistic about the future of their business
Optimism remains down about eight percentage points since March 2020 before the pandemic, but 72% of business leaders feel optimistic about the future as of August 2020. To me, this is one of the most important small business statistics, and it tracks with what we hear when we talk to small business owners and leaders. The pandemic has tested us all personally and professionally, and one thing I continue to hear from our customers is that we’re learning we’re a lot stronger than we thought. We can pivot, change, and take these challenges head on. SMB business leaders are a resilient group.
2. SMB leaders take action against racial injustice, but there’s more work to be done
2020 also shed a light on ongoing systemic racism and the harmful impacts it has on our most underrepresented communities — in particular, the Black community and recently, the American and Pacific Islander (AAPI) community.
Our research shows some SMB leaders, globally, have taken action, such as training employees on more inclusive practices (39%), and/or engaging in conversations about race and diversity (21%). However, the data shows us that not all SMB leaders are taking the same approach to advancing race equality. Almost half of Black SMB leaders in the U.S.* say their business has taken a public stance regarding racial justice issues (48%) and/or is making an active effort to train employees on more inclusive practices (46%). We also see a clear gap between the proportion of Black and Latinx* SMB leaders in the U.S. who have taken any action against racial injustice (81% and 54%, respectively) as compared to their white counterparts (40%).
One thing I continue to hear from our customers is that we’re learning we’re a lot stronger than we thought. We can pivot, change, and take these challenges head on. SMB business leaders are a resilient group.
Though this work is critical and valuable, 55% of SMB leaders in the U.S. have not taken any listed action to combat racial injustice. To reach true equality and equity, all of us need to do our part. At Salesforce, we’re focusing on training and programs to help employees better understand how to be racial equality allies. We hope to see continued improvement across the SMB sector.
3. Small and medium businesses have changed the way they interact with customers
Four things growing SMBs are doing to change customer interactions and address new customer expectations since the COVID-19 pandemic began jumped out at me:
- A majority of growing SMBs (57%) said they are more careful about their customer communications. This includes not only targeted messages, but also transparency about what they’re doing to address pandemic-specific concerns (e.g., food pickup/delivery).
- They are expanding how customers reach them. Many SMBs are now using SMS and other real-time messaging platforms to offer instant customer service. Nearly half (49%) of growing SMBs said they have expanded the ways customers can reach them.
- 49% of growing SMBs are offering more flexibility to customers, including around payment terms. Customers are in control and need to be treated as such.
- Just over a third of growing SMBs (37%) are prioritizing developing customer relationships over one-time transactions.
4. Digital-forward SMBs are more prepared to handle market volatility
The pandemic has forced many businesses to digitize in order to offer touchless payments, contactless pick-up/delivery of goods, and other COVID-safer customer options. Thirty-five percent of growing businesses that had less than 50% of business operations digitized before the pandemic said the pandemic accelerated their digitization plans, but only 28% of stagnant or declining SMBs said the same.
5. Small business statistics indicate they’re taking action to prepare for future crises
Notably, some SMBs (27%) have started emergency funds as a backstop against future business interruptions. The majority of SMBs are so dependent on monthly revenue that even a one month disruption can require recovery.
Many SMBs are now using SMS and other real-time messaging platforms to offer instant customer service. Nearly half (49%) of growing SMBs said they have expanded the ways customers can reach them.
SMBs are also digitizing customer interactions (38%), internal communications (35%), and workflows (34%) to help ensure flexibility and continuity of operations in the event of a future crisis. Before the pandemic, SMB leaders reported that on average, 44% of their business operations were digitized. Nearly one in three of those that had less than 50% of business operations digitized before the pandemic began (30%) said the pandemic had accelerated their digitization initiatives.
These digitization exercises can deliver benefits well beyond the life of this pandemic. As we make our way toward full economic reopening, we may return to some of the old ways of doing business. But like buying more online and working from home, many of the changes brought on by the pandemic – or accelerated by it – are here to stay.
*Small sample size (n<100), results must be interpreted directionally.