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Last updated May 19, 2021
Now that we are midway through 2021 and more and more Americans are getting the vaccine, it’s time to reflect on the past year and what it meant to small businesses.
Today, we will take a look back at the state of small businesses in the U.S. before the COVID-19 pandemic, and we will discuss what small business trends to look out for in 2021.
Increase Your Leads?
The State of Small Businesses Before COVID
Before we can speak of the small business trends of tomorrow, we need to see where we were yesterday and today. It’s no secret COVID completely changed the way we live and do business, and even though it turned out profitable for some, that wasn’t the case for others.
As a business owner, you might recognize yourself in the lines that follow or, on the contrary, you might find that your situation falls in the less popular percentages. You can use that information as leverage and a good foundation for your business plans.
Who are the small business owners of today?
While many news media focus on the youngest generation (known as Generation Z) entering the workforce, the majority of small business owners continue to be the so-called baby boomers. Those are the individuals born between 1946 and 1964. According to the study, over 57% of the 2,700 people who participated were over the age of 50.
It is notable that the level of education of small business owners does not reflect their profitability.
The majority of them (49%) decide to establish a business either because they prefer to be their own boss or because they want to pursue their passion/trade.
What are today’s small businesses?
According to the U.S. Small Business Administration Agency’s 2018 report, there are over 30 million small businesses in the country. The majority of the interviewed owners were in the health, food, restaurant, and fitness industries. There was also a significant percentage of businesses providing home services.
Is yours in one of these industries? You are not alone in the challenges you may be facing! This brings us to our next point…
What are the challenges that small businesses face?
Despite most small business owners being generally positive about the future of their business (see full infographic), as well as the low unemployment rate, there are still challenges.
Respondents in the study said that they are having more and more trouble trying to find and retain the right employees. Around 41% of business owners employ between 2 and 5 people, which means every employee counts. Each team member is crucial in keeping the business profitable.
However, the two main challenges remain; the lack of sufficient cash flow, and the inability to advertise their business in a way that brings them leads.
Do you share the same struggles? You can read more about advertising your business online and profiting from it here.
The Small Business Trends You Need to Know in 2021
Some of these are evergreen trends
Trends come and go, and not all of those are related to your type of business. However, here are a few that can affect all businesses regardless of their industry.
#1 Customer reviews (a.k.a. user-generated content) matter more than ever
No matter if you fix appliances, cars, or drywall, people will not choose a business they don’t trust. Building authority and credibility in the eyes of the prospective client come from showing social proof of your professionalism.
That social proof is customer reviews. They serve to verify that you are not a scam and can be trusted. Doing that is especially important in 2021 when people operate on tight budgets and want to make sure they get their money’s worth.
In fact, according to a study by Podium, over 93% of your prospective customers will decide whether they will hire you or not based on your online reviews.
The value of real people promoting your product or service is priceless. It makes you more trustworthy, and it encourages conversions. If there is one evergreen trend in small business, it’s the simple fact that your past customers will advertise your product/service way better and more effectively than you ever could. Do your best to encourage customers to leave reviews.
#2 Simply being online won’t cut it anymore. You have to be mobile-friendly, too.
It is no secret that younger generations, known as millennials, will soon be the majority of the world population. In fact, they will represent 75% of the workforce by the year 2025.
Why should you care?
Young people predominantly use the Internet through their mobile phones, especially when they are looking for local service providers. What this means is you will have to make your website (and any other web platform you are using) suitable for smaller phone screens. If you do not, you can lose out on potential clients.
#3 Your employees value happiness more than promotion
It does not matter that you are not a corporation. Small businesses have a company culture and established traditions, too. Your employees will count on that, they will expect it, and if you don’t provide it – they will go somewhere else. If they have no other options, they will stay with you, but they won’t give you their best performance.
Whether that is enough for you is entirely your choice. However, research has shown that happy workers = higher commitment to the job. Making your staff feel appreciated and valued doesn’t always require monetary incentives. Sometimes all it takes is establishing a tradition like after-hour Beer Tuesdays with the team.
Keep that in mind.
In a post-pandemic world, your relationship with your employees will likely change (if it hasn’t already). According to a study by Guidant Financial on the state of small businesses after COVID, about 21% of surveyed owners said they suffered a loss of revenue, and about 10% had to cut down wages to keep afloat. Your employees are aware of that crisis, but you need to show your appreciation for them every day.
#4 The introduction of 5G networks
It is okay if you have no idea what that is. 5G is a fifth-generation network of mobile Internet connectivity. You should care because it means people will be able to find you faster as their mobile Internet connection will be more reliable and speedier. If you are using an app or some sort of Intranet network (internal web platform restricted to your team members only), 5G will help you get things done faster.
Are you a mover? Do you have a local courier business? Is your company in the landscaping industry? These and virtually all other types of small businesses will require you to actively communicate with other members of your team and keep track of your schedule, work progress, and other relevant details.
The introduction of 5G networks is, therefore, a crucially important trend to look out for in 2021.
#5 A greater focus on retaining customers
Living in an uncertain economy can mean a lot of things for small businesses, but one thing is for sure: companies will look for ways to retain customers by getting them to sign up for ongoing products and services. This ensures future business and stability, and it’s something virtually any company can benefit from.
Here are a few ways to retain your customers:
- Set up a loyalty program
- Offer ongoing personal and home services. This includes landscaping, plumbing, home repair, and the likes. It also includes personal coaching where you can sign up customers for ongoing sessions.
- Product subscriptions
- Referral programs
#6 Flexible Employee Policies
With 2020 came the need for business owners to embrace the work-from-home situation (for industries where that was possible, of course). In 2021 and onward, it’s likely that employees will be looking for more flexible working hours, remote work, better communication, and other social benefits,
#7 Small Businesses Will Look for More Diverse Financing Options
Funding your small business in a post-pandemic economy will be crucial to keep things going. One of the promising small business trends of 2021 is the many funding opportunities readily available to owners. Some creative options include:
- Invoice and accounts receivable funding — This is recommended for businesses that work with invoice payments. With that type of funding, you can collect standing payments on invoices right away without having to wait for the client to pay.
- Emergency funding — The Small Business Administration’s Paycheck Protection Program and other available loans are a great start for struggling businesses.
- Microloans — These are typically smaller loans and are good for businesses that don’t qualify for traditional bank loans. They are usually up to $50,000 and you can use them for any business purpose from paychecks and rents to paying for supplies.
- Crowdfunding — Although it is not an ideal option, platforms like GoFundMe and Kickstarter continue to offer support for innovative products or services, so be sure to give crowdfunding a try if that’s your area of business.
The State of Small Businesses in 2021
- The majority of small business owners are over the age of 50
- The main industries that small businesses occupy are food/restaurant, beauty/health/fitness, and business services
- The main two challenges that small businesses face are lack of capital/cash flow and advertising
- Customer reviews are gaining increased importance
- Getting online is a must, adapting your website to mobile devices is too
- Happy team = higher commitment to the job
- 5G mobile Internet networks will speed things up significantly
- Retaining your customers will become increasingly more important
- Setting flexible employee policies in place will help you retain your workers and keep them happy
- There are more funding opportunities available to small business owners