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To say 2020 was a year of disruption and transition for small and medium businesses is a huge understatement. Everything as we knew it was turned on its head, and lots of small business owners are struggling. The question now is, what is to come in 2021? Read on and acquaint yourself with the trends which are likely to take shape in the small business world in 2021.
A sharp rise in alternative sources of business capital
It is worth repeating here that small businesses were financially battered and bruised in 2020 and they are seeking avenues to inject capital into their operations.
However, the books of accounts of many small businesses don’t look pretty after the shocks of 2020, so a lot of these businesses will not qualify for traditional business loans.
Additionally, the turmoil of 2020 has made some small business owners wary of loans from traditional lending institutions like banks. Consequently, these businesses will be keen to find an alternative source of capital.
Venture capital, peer-to-peer lending and other such types of alternative financing will see a growth in demand as small businesses look to revive their operations this year.
Small businesses are expected to be more involved in their communities
In 2020, you may have had some companies called out for the way they behaved during the pandemic. This scrutiny is bound to get sharper, and 2021 will see an increase in what communities expect of the small businesses they patronize.
Already, there is a 1% pledge movement growing in which companies commit 1% of their profits to supporting worthy causes. This, however, may not be enough. Small business owners will have to find ways to play a bigger role in their communities so that their target customers regard them as entities deserving of their hard earned money.
Customer reviews will take on added importance
Digitization became a buzzword in 2020 as players in all industries were forced to go online as a matter of survival. As shoppers move online, it becomes increasingly important to give them avenues through which to make purchasing decisions when faced with a variety of sellers to choose from.
That is where reviews come in. People believe people, especially those they can relate with. Small businesses therefore need to establish hassle-free systems through which their clients can leave feedback.
Don’t try to delete feedback that is less than glowing. It is hard to satisfy everyone 100%, and those (hopefully) few complaints add a touch of reality to the reviews about your products or services.
Reviews for your small business are also important because 2021 is the time for you to give big brands a run for their money. Why is this so? Remember the financial battering of last year? People are now motivated to seek value and savings, and big brands tend to be pricier. The rave reviews about your growing and affordable brand will attract more customers in 2021.
The ROI of multimedia will shoot up
People are spending more time online on work-related engagements, and that means that traditional ways of business messaging, such as press releases, will lose their effectiveness. Who wants to read a two-page press release after writing a 20-page business report?
The option is multimedia messaging. A short, entertaining video about your products will be more attractive and effective since these can be watched during interludes during a virtual work day.
Small businesses would therefore be well-advised to invest more in multimedia messaging if they are to win the hearts and minds of their target audiences. The return on investment (ROI) will be greater!
Planning for the unknown will take center-stage
2020 brought turmoil that hit small businesses like a train. In 2021, we will see an increased emphasis on planning for the unknown in order to make small businesses more resilient to the kinds of shocks that were witnessed when the pandemic broke out.
The fact is that more and bigger shocks will come, but no one can predict when or what form they will take. For this reason, small businesses will engage more in risk assessment and scenario planning to increase their overall robustness and ability to weather all kinds of storms.
Take cash reserves as an example. The small businesses which survived 2020 are the ones which had some reserves to take them through nearly a year, and those which didn’t have such reserves went down. Also, businesses which had other weaknesses (staffing issues and product quality challenges, for instance) saw their collapse accelerated by the pandemic.
Going forward, small businesses that learned from the shocks of 2020 will shine the torch more fiercely on themselves and continually plug any developing holes which can jeopardize their health. Make your business disruption-proof in 2021.
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The need for Covid-19 policies will grow
Work is slowly reviving and vaccines are being rolled out. As 2021 progresses, there will be an increased demand for small businesses to put in a place a Covid-19 policy. For example, will it be mandatory for your employees to get the shot? What measures are you mandating for protecting your employees and customers?
A policy clarifies what needs to done and when. It also helps you to avoid regulatory and liability issues during this time when sensitivities are heightened around the pandemic.
Remember, there are federal, state and local laws which you shouldn’t ignore while formulating the Covid-19 policy of your small business.
The federal minimum wage may go up
President Biden spoke strongly about raising the minimum wage to nearly double what it is currently during his campaigns, and the control of both Houses that Democrats enjoy could set the stage for minimum wage changes.
As a small business owner, any increase to the minimum wage will have a direct effect on your operational costs, and this is a situation you need to keep an eye on and adjust accordingly.
For example, you could review the pricing of your products so that this added payroll cost is absorbed. Better still, why not increase efficiency so that gross profits grow without an increase in product price?
Increased social media marketing
2020 forced everyone online, and that is where the marketing messages of your business will need to be directed if you are to see sales grow.
Think about Facebook, for example. This platform’s monthly number of users is staggering, and that is a compelling case for upping your social media marketing efforts and budget. Reaching even a tiny fraction of those social media users would do wonders for your business!
There is a huge lot we can say about the trends and predictions for 2021, but the key message is that as a small business owner, don’t stop learning. Change will always come, and it is coming at a faster speed. The best way to ride it out is to know or anticipate when change has come, and then show how agile and nimble your business is in riding out the wave!
To Your Success,
Jairek Robbins