With the easing of Covid restrictions, small businesses can breathe a collective sigh of relief as they’ll hopefully remain open for the foreseeable future.
And It’s great to see businesses feeling more optimistic about the future. Our research shows almost one in five (17%) small business owners expect their revenues to grow by 10% in the first six months after lockdown guidelines are completely relaxed.
However, some things have changed, most notably business priorities and customer preferences. Since the onset of the pandemic, the phrase expect the unexpected became an integral part of the business vocabulary in anticipation of the road ahead.
With this in mind, here are four trends and predictions set to shape continued recovery and help small businesses find success in the months and years ahead.
Technology will open new opportunities for small businesses
In recent years, the playing field has been levelling up for small businesses. Today, they have access to the best technology out there – things like digital payment tools, and apps that forecast cash flow.
For example, we recently launched Xero Analytics Plus, a tool which helps businesses better monitor cash flow, forecast and project business bank balances 7, 30, 60 and 90 days in the future.
It’s just the start. There will be a sharp rise in the number of digital tools that support small businesses.
It’s positive to see many SMEs embracing this digital world. 40% of retail revenue is now driven from online sales, while a quarter (26%) of SMEs have invested in cloud-based technologies such as Dropbox, Slack and Xero to run their businesses. Almost a third (31%) have removed the use of paper invoices and abandoned paper payslips.
Tapping into renewed customer loyalty
There is a growing depth of public goodwill and loyalty towards small businesses following the pandemic. Half of consumers (49%) now feel greater loyalty towards local businesses over bigger firms, and 42% plan to shop small more often after lockdown.
This gives small businesses an opportunity to connect with customers in a way corporates will struggle to replicate. And many are already adapting to capitalise on this, with 39% of SMEs saying they will focus on growing relationships with their customers over the next three years, while a quarter (27%) plan to build consumer trust.
Small businesses will have the analytical and technological power of corporates
There was a time when advanced data crunching and machine learning-powered analytics were only accessible to bigger corporations ‘ but this is changing.
The cloud has boosted access and lowered costs involved. Having access to stronger insights and tools, coupled with support from accountants, they will punch way above their weight in the future.
Our research found that 27% of businesses plan to invest in more sophisticated analytical tools this year. A quarter of businesses think that their profitability would increase if they had access to better insights and data on business performance.
Small businesses will explore new trading frontiers
The rise in remote working and rapid adoption of new technology during the pandemic has made it much easier to sell beyond physical location. More than half (57%) of SME owners plan to expand trade to new territories outside the EU and at home with the help of online tools.
The way small businesses operate on a global scale is transforming and it’s positive to see the impact of Covid and Brexit haven’t dampened their ambitions. 44% have explored new markets for the first time, with one third (33 per cent) increasing their customer base geographically during the pandemic due to a bigger focus on borderless e-commerce sales.