Within the first three months of the COVID-19 pandemic coming to the U.S.—from February to April 2020—the number of active small business owners plummeted. Described as the largest drop in active business in U.S. history, there were 3.3 million temporary closures across the nation. That’s 22% of SMB owners no longer active as a result of state, local, federal efforts to curb the spread of the deadly virus.
As we progress into a new landscape shaped by the 2020 pandemic, business and marketing experts have advised that e-commerce, customer experience, and other post-COVID-19 market trends are here to stay.
Here’s how adapting to these changes helped many SMBs survive the worst of the pandemic, how equipment sellers can support their own SMB clients, and how both suppliers and merchants can ride the COVID-19 recovery wave together toward a new and profitable normal.
How COVID-19 Has Impacted SMB Health and Outlook
Many SMBs suffered acutely as a result of the pandemic. And, many of these losses disproportionately affected minority-owned businesses. Research from the Current Population Survey, issued by the U.S. Bureau of Labor Statistics, found some sobering trends: Black-owned businesses experienced a 41% decrease while Latinx- and Asian-owned business activity dropped by 32% and 26% respectively. Immigrant-owned (36%) and female-owned (25%) businesses were also disproportionately affected as businesses deemed non-essential—retail, restaurants, fitness, entertainment, etc.—were compelled to close during quarantine.
Because SMBs are the key drivers of the U.S. economy, economic analysts were legitimately concerned that many of these temporary closures would become permanent. Concerted efforts such as the CARES Act, PPP Loans, local fundraising initiatives, etc., helped bridge the cash-flow gap for many, but not universally and not for the long-term.
SMBs continue to be strapped for capital. Fewer banks are lending to them and the struggle to return to pre-COVID-19 margins is real. Investing wisely in new technologies, systems, and practices—or in partnerships with the businesses that provide them—to adapt to market trends is as critical ever. And these investments are informed by consumer behavior.
How Changed Consumer Behavior Should Inform Your Next Step
As the backbone of the U.S. economy, the same business demographic hit hardest during the pandemic—SMBs with fewer than 500 employees—is also poised to drive economic recovery.
Dax Dasilva, CEO of digital commerce platform Lightspeed, believes that “independent retailers will drive the revitalization of cities and communities in 2021” and that those merchants who prioritized and nourished their digital channels will likely recover faster. This is because of what the pandemic has done to influence consumer behavior during quarantine and after.
According to surveys conducted by Cotton Incorporated, consumers feel more comfortable shopping online than in person these days, with 69% of respondents saying that COVID-19 has forever changed the way they expect to shop in the future. The importance of creating a seamless e-commerce experience is paramount, and payment platforms such as Affirm for B2C and Clicklease for B2B fill a present and critical need for alternative financing options and payment flexibility.
How Payment Flexibility Helps SMBs Fine-Tune Their Investment Strategies
With traditional B2B lenders cutting off SMB access to funding right and left, alternate payment options are slated to proliferate in 2021, according to the U.S. Small Business Association (SBA).
Technically, alternate payment options can include contactless payments in store or online payments with curbside pickups, but for your customers—professional consumers (prosumers) looking to make big equipment purchases for their businesses—this looks like a payment option with no FICO or TIB requirements. It looks like proprietary underwriting algorithms and instant approvals. And most importantly, it looks like the option to purchase equipment in manageable installments, allowing them more freedom to allocate resources where it’s needed most.
By partnering with Clicklease to create an alternate payment option for your own online store or showroom, you give your SMB prosumers invaluable finance options to help them revitalize their businesses and the economy alike.