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by Bob Legters
August 20, 2020
by Bob Legters
August 20, 2020
A new normal is emerging for small businesses, even as the trajectory of COVID-19 remains unclear. Small businesses face a landscape forever altered as the first wave of economic disruption settles.
Though it’s still too early to assess the full scope of long-term impacts, outlines of a new small business normal are taking shape today including emphasis on digital transformation, technology investments and logistical flexibility.
Small businesses will also need something that, thankfully, they have in abundance: an innovative spirit born of practical necessity.
Small businesses are feeling the direct economic hit of COVID-19. Businesses still standing face COVID-19 related challenges that were scarcely imagined—much less planned for.
As of May 2020, over 100,000 U.S. small businesses were projected to close since the onset of the pandemic that, while 3% of U.S. restaurants have shuttered. The closure of non-essential businesses was the most dramatic and earliest of a rolling tide of challenges.
Cleaning and sanitation expenses are going through the roof as businesses reopen with new operating requirements to help protect staff and customers alike. Social distancing requirements reduce customer capacities, leaving pre-pandemic square footage equations irrelevant.
Additional indirect costs loom that aren’t necessarily on a small business owner’s radar. Unprecedented jobless claims mean state unemployment fund contributions are poised to spike. Utilities, suppliers and other vendors will surely pass along additional costs they’ve incurred during the pandemic.
The highly disruptive early days of COVID-19 saw consumer spend shift to eCommerce giants that were often the only alternative as local businesses closed. Small businesses may not be losing their customers to retail giants like Amazon or Walmart through a single disruptive event. Rather, the challenge for small businesses is slowly but surely losing on cost and/or convenience—one item at a time.
Small businesses are finding ways to compete against all odds, as they always do through their abilities to adapt, innovate and leverage their smaller size to act nimbly. The new twist is technologies that help small businesses leverage that agility to legitimately compete with competitors of any size.
Looking beyond the current crisis-imposed moment, adopting future-forward technologies may seem like a distant priority, but it’s precisely what the new normal requires.
“Digital first” is an anchor truism of the new normal. We recently conducted a study at FIS and found that 40 percent of U.S. consumers are likely to shop online more than in-store in the future. Digital transformation isn’t aspirational; architecting around digital-first customers isn’t aspirational—it’s foundational.
Technology providers are making it easier for small businesses to adopt omnichannel solutions that consumers crave. A village of vendors from eCommerce platforms to payment processors are helping small businesses compete on a more level playing field.
COVID-19 is accelerating trends already in motion, like the adoption of contactless payments. Consumers are flocking to payment methods that are perceived to be safer than cash or other electronic payments, like mobile wallets and contactless credit and debit cards.
The speed, safety and convenience of a new breed of digital payments are likely to gain new consumer devotees going forward. Technological investments such as these can reduce costs of acceptance and capture new consumers during this period when behaviors are changing rapidly.
Small businesses everywhere are showing why they’re still the backbone of our economy. Through determined resilience, innovative spirit and relentless optimism, small businesses are not just holding ground, but moving forward with renewed purpose.
Waiting for a return to the old normal is likely to threaten the survival of small businesses. Small business owners need to be active agents in crafting their own future success. The new normal isn’t a clean break—it retains the optimism inherent in every small business.
The good news is that disruption on such a massive scale poses tremendous opportunity. Consumer behavior is at a classic inflection point. Small businesses should be thinking about where their customers are going to be in a month, or a year—so they can be there to meet them.
Architecting a business for the new normal is rooted in many of the same basics of the past: Making the customer comfortable in today’s world, communicating and engaging with customers in ways that work for them, and maintaining a relentless focus on serving customer needs flexibly by default.
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