How Covid-19 is changing the way small businesses operate
To help you better adapt to the current situation, we've rounded up information about recent changes, made some predictions, and assembled tips to facilitate your bounceback.
11 June 2020 · 8 min read
No one could’ve planned for the way 2020 is going. Planning and stability — two factors that every business benefits from — are completely missing right now.
If you’re a small business owner, the last several months have likely been unpredictable and scary, if not nearly impossible. To help you better adapt to the current situation, we’ve rounded up information about recent changes, made some predictions, and assembled tips to facilitate your bounceback.
A shift to remote work
According to research by Forbes, 54% of major companies have adopted some form of work-from-home policy in light of Covid-19.
Remote work has been around for nearly as long as personal computers, but it has rapidly grown in popularity over the last decade. And in the past five months, it has become the new normal. Businesses of all stripes are quickly building remote work infrastructures and adopting tools like Zoom and Slack.
A work-from-home lifestyle is usually associated with a decrease in stress and an increase in productivity. However, the current state of remote work is actually plagued by the opposite for fairly obvious reasons. For now, it’s unclear how many businesses will shift back to an in-person working style and how many will keep doing WFH to save on real estate and other expenses.
Customers prefer digital-first commerce in every category
Yet another area of business that is not new but still experiencing explosive growth is digital-first commerce. “Digital-first” refers to the idea that online channels in marketing and commerce are not a “secondary” or “new” way of doing business, but rather should be the primary focus for a company’s efforts.
Most large companies, especially major brands, have committed themselves to a digital-first approach. Small businesses, however, have been much less quick to adopt a digital-first perspective for several reasons. Namely, it’s a costly investment, and one that (until recently) wasn’t a priority.
Now that everyone is doing business from home, however, a digital-first approach is essential for every business in every category. No matter what sector you’re in, this will be critical to your success for the foreseeable future.
Contactless payment is more than a convenience
Again, we have a technology that has existed for several years now but had not been widely adopted (at least not in the U.S.) for quite some time. Contactless payments are any means of payment that don’t require physical objects (like paper money or credit cards) to be handed over, swiped, or inserted. Apple Pay and Google Pay are the two most prominent examples of this tech.
In our current climate of social distancing and quarantining, the benefit of contactless payments is abundantly clear. It’s not only more secure, but also crucial to reducing the spread of Covid-19. Small businesses should seriously consider investing in contactless card readers if they haven’t already.
Small businesses that rely on capital are burning out
This is one of the sad realities of our current economy, and it’s most prevalent in the tech industry. Startups have had a history, especially in recent years, of generating lots of hype and excitement around an innovative product or service that will apparently become the next big thing.
Wanting to be a part of a business like this, investors support these businesses with copious amounts of capital, sometimes for three to five years, to help the business sustain itself. Though risky, this business model has helped many a small business find its footing in the market.
Unfortunately, the post-Covid economy doesn’t allow for these risks, and many of these businesses are rapidly burning out, hoping to be acquired. It’s a likely prediction that these types of businesses aren’t going to be so common in the near future, and we might not see them return for quite some time as investors become more cautious.
What will small business look like after Covid-19?
Strategic, not permanent, remote work
Several predictions are going around right now that white-collar workers will largely remain remote employees after Covid-19 is resolved. While this isn’t an unrealistic prediction, as remote work has been on the rise for several years now and businesses are unlikely to abandon it after adjusting, we think there’s room for a more realistic theory.
Rather than every business becoming a fully digitized, remote work company, a more grounded prediction is that remote work will become a strategic aspect of a company’s process rather than a permanent paradigm shift. Bottom line businesses will likely use remote work to fill in previous gaps.
For example, when someone wants to take a vacation or participate in an event but they don’t have enough vacation time, remote work can allow them to complete their required tasks without having to miss out. Additionally, remote work can enable people to work from home when feeling sick, reducing the spread of germs. Employees will also have more time to spend with their family and will devote less time to commuting.
Thinking about remote work this way, as a way to add flexibility to traditional work structures rather than replace them, makes a lot more sense. It provides the perks of remote work without abandoning the benefits of in-person contact, such as socializing, camaraderie, and collaboration.
While some employees may prefer to work at home alone, other workers would probably like to maintain office relationships while having the option to work from home when needed.
Workplaces will be much healthier
One of the unfortunate realizations of the pandemic is that most of our culture is not as health-conscious as it should be, and this extends to the workplace as well. There are many guesses to how this will affect the average person’s paranoia and habits related to getting sick, but it’s safe to say there will be changes.
This is especially true for businesses where mindful changes are not only recommended but required. Coupled with the shift in attitude among many people, and it’s clear that businesses are going to start implementing practices to reduce the chances of something like this happening again.
The clearest effect will likely be the implementation of stricter hygiene practices, such as masks becoming the norm for sick people, more handwashing, and employees taking more sick days. Small businesses can help keep their employees safe by providing easier access to health care, gym facilities, and meditation centers that improve health and productivity.
An increase in XaaS business models
With everyone staying home, XaaS business models have exploded. Essentially, a XaaS business model, derived from the SaaS model, is when a business offers a product as a service rather than as something to buy. Netflix is one of the most popular examples of this, as are Uber and Lyft. Rather than buying a movie or car, you pay a fee for access to a movie or car.
This is very similar to a typical subscription business model, but with a root in digital technology. And as you might expect, it has become even more popular than before. Additionally, this business model is popular because it allows people to enjoy a service without paying for a product outright.
Since people are likely to increase their reliance on digital services post-Covid and will have less free cash due to a shrinking economy, XaaS services have a good chance of becoming even more popular.
Shorter supply chains
One of the issues highlighted by Covid-19 is just how convoluted most supply chains really are. Many companies found that several points in their supply chain were negatively affected by Covid even before it became a global issue.
Though a longer supply chain creates more businesses and lowers the cost of goods, it also creates a chain of dependencies that can easily be disrupted by a global event. This has resulted in supply chain managers struggling to manage the situation and businesses having to seriously reconsider their strategy.
Moving forward, we’re likely to see a much shorter supply chain in the future. Tools like 3D printers might become more common, enabling companies to produce more product components in-house rather than outsourcing them to other companies. We might also see an increase in locally-sourced materials soon.
How SMBs can adjust to a post-Covid world
Reopening is an experiment
We can only imagine how eager you are to reopen your business. Because the world has never experienced this type of shutdown before, it’s difficult to predict the consequences of reopening.
Opening without caution in an attempt to recoup losses could worsen the situation and send us back to square one. Small businesses should strategically consider when and how to reopen, take the recommended safety precautions, and be willing to adapt if things don’t seem to be working. We hope these tips help you plan out your return.
Shift to a digital-first business model
One of the most obvious results of Covid-19 is how digital-first business strategies are not just going to increase profits or add convenience for customers, but will become a necessity. There is going to be a massive increase in the number of people working from home, a decrease in the number of people wanting to go out, and a restructuring of the way we think of many of our industries.
To adapt to these changes, small businesses will need to build a digital presence and storefront. Products and services will need to be digitized, or at the very least have digital counterparts. If you’re not sure where to begin in your journey to digitization, you can check out the tools that B12 offers.
Communicate with your employees and customers
Lastly, ensure that your employees and customers are aware of when and how you are reopening. These are stressful times for everyone, and many people feel overwhelmed or uncertain about the changes happening around them. The last thing you want to do is offer vague policies that feel confusing or frustrating to your employees and customers.
You can avoid these issues by framing new health policies and requirements with clearly communicated intentions. Putting a focus on health and safety will reduce a significant amount of anxiety tied to these changes.
Running a business impacted by Covid-19
When someone becomes a small business owner, they assume a certain amount of risk and become adept at learning to manage it. It’s the mark of a savvy businessperson. These current circumstances, however, are challenging even the world’s biggest companies in serious ways. If you’re feeling overwhelmed by all of the risks and stress to your business, employees, and customers, you’re not alone.
For more tips on digitizing your business and adapting to this new world, you can browse the rest of our Resource Center.