3 Strategies to Propel Your Small Business to Success
Small businesses spent the last year scrambling to adapt to the COVID-19 pandemic. Now, as the crisis slowly comes to a close, they're facing yet another transition. How will the economy change in 2021, and how can small businesses prepare for what lies ahead? It's not easy to plan for the future in times of such economic uncertainty. However, there are certain things small businesses can do to position themselves for success.
How will business change as pandemic restrictions lift?
The business effects of the COVID-19 pandemic weren't felt evenly. While some businesses ground to a halt, others raced to keep up as demand soared to unprecedented heights. Just as small businesses experienced the pandemic differently, they'll emerge from it differently, too. However, there are some trends that are expected to shape every sector:
Technology made it possible for a business to continue during the pandemic. Even when COVID-19 is long gone, the digital transformation is here to stay. From remote work to online shopping, digital interactions will define the way we do business.
Returning consumer confidence
Spenders became savers during the pandemic, with consumer spending shrinking 3.9% in 2020. That's the biggest drop since 1932, Reuters reports. As the economy rebounds, consumers will be eager to spend on everything they missed during the pandemic, including dining, entertainment, and leisure travel.
Trust and loyalty matter
Consumers aren't spending their money just anywhere. Consumers overwhelmingly prefer to support brands with an identifiable purpose. That includes supporting social causes, following fair business practices, and delivering exceptional customer service. Luckily for small businesses, these shifting priorities have led to renewed interest in shopping locally.
Competition for talent
The struggle to find qualified applicants isn't a new one, but small businesses face even bigger challenges this year. Many Americans have no choice but to remain out of the workforce until school and childcare returns to normal, shrinking the applicant pool even further.
3 winning small business strategies
So how can businesses position themselves for success in light of these trends? No matter the industry, these are three approaches that will serve small businesses well in 2021 and beyond:
Invest in operational efficiencies
Good help isn't just hard to come by; it's also expensive. Rather than racing to hire, businesses should look for ways to operate more efficiently. This includes investing in automation tools and using independent contractors and service providers to meet labor needs at a lower cost. Recurring tasks are the first thing to automate or outsource. Low-hanging fruit includes:
Scheduling meetings and/or appointments.
Backing up files.
Bookkeeping and running financial reports.
Paying business taxes.
Filing annual reports.
Answering customer support emails.
Following up on leads.
Cross-posting to social media.
Many of these tasks can be automated using apps and software. Mailchimp, for example, can automatically email leads, while cloud-based accounting and inventory tools integrate with point-of-sale systems to eliminate manual data entry.
If you can't automate it, outsource it. Virtual assistants are great for handing off everyday administrative tasks, while outsourced customer service reduces workloads and adds 24/7 support. Small businesses should also consider outsourcing corporate compliance to a service well-versed in legal requirements — here is one. Even with a simple business structure like a limited liability company, failing to submit the required documents and fees could be an expensive mistake.
Rethink your financial strategy
Reducing labor needs is one way to shrink operational costs, but it may not be enough to put small businesses on the path to profitability. Businesses that suffered from slowed revenue in 2020 may need to secure financing before ramping up production. There are a few federal relief programs available, including another round of Paycheck Protection Program and Economic Injury Disaster Loans, as well as new grant programs for venues and restaurants. Businesses can also apply for traditional sources of working capital such as loans, lines of credit, business credit cards, and accounts receivable financing.
Small businesses should also re-evaluate their risk management strategy as they emerge from the pandemic. Building cash reserves and protecting against expensive threats like liability lawsuits and cybercrime will help companies avoid future financial crises.
Build a bigger digital footprint
While small business owners look for places to scale back spending, there are certain domains that deserve increased investment in 2021. Perhaps the most notable of these is a company's digital footprint. The internet is increasingly the place where consumers discover and interact with brands. Small businesses that fail to establish an online presence are missing out on an important source of brand awareness and loyalty.
In addition to building out e-commerce channels, small businesses should focus on digital marketing and online community building as a way to engage, inform, and delight customers. Other ways businesses can expand their digital footprint include:
Designing a mobile-friendly website and e-commerce platform.
Offering mobile ordering and/or virtual services.
Developing an app.
Adding online scheduling.
Expanding customer service to live chat and social media.
Publishing written and video content.
Soliciting online reviews from happy customers.
There’s finally a light at the end of the tunnel for small businesses impacted by the COVID-19 pandemic. However, the challenges aren’t over quite yet. As small businesses emerge from the pandemic, they’ll need to stay flexible and keep adapting in order to meet the demands of our changing economy.
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