The COVID-19 pandemic has devastated small businesses. However, it also forced business owners to improvise and develop robust processes that would make them more resilient. While the world is not yet out of the woods in terms of a pandemic, new trends have emerged that cannot be ignored.
Financial firm Capital One surveyed small business owners at the end of 2020, and 67% of respondents said they were confident their income would return to pre-pandemic levels. There is no doubt that new trends in financing are giving confidence to small business owners.
Here are 3 trends that reflect the positive change SMEs have experienced thanks to the pandemic.
Lines of credit and loans
As the pandemic struck towards the end of the first quarter of 2020, many banks and credit unions withdrew credit offers and significantly reduced credit limits. This has left many small businesses without valuable funding and no shortage of cash. Advances in technology have made it possible to reduce lines of credit in weeks instead of months as it used to be.
However, as the pandemic has normalized and vaccination programs continue to roll out, banks are once again loosening their stock markets, meaning SMEs in 2021 can expect larger lines of credit. If your business is in an industry that has held up well during the pandemic, such as e-commerce, healthcare, construction, and professional services, accessing lines of credit is even easier.
A key development during the pandemic has been the rise of online lenders and small business owners who have moved away from traditional financing outlets. As big banks rejected loan applications, lenders based on online algorithms stepped in to fill the gap.
The result has been a massive increase in online lending that has left banks scrambling to find their old sources of business. With bond yields remaining low thanks to Federal Reserve policies, loans remain a great option for credit unions and big banks.
Competition between online fintech companies and banks means that business owners can access credit at more favorable rates than before, which means a lower interest charge for SMEs operating with low margins. .
Automation and transformation
Digital transformation was a buzzword launched by companies in the years leading up to the pandemic. However, as physical outlets closed once lockdowns began, businesses discovered digital transformation was a necessity. Business owners who pivoted online managed to save their small businesses, while those who couldn’t struggled.
A key aspect of the digital transformation was the automation of payments and invoicing. SMBs have long relied on manual mailing of checks, stuffing envelopes and depositing checks on the way to the bank. Lockdowns have made these processes untenable.
The only solution was to invest in electronic solutions that would eliminate the need for manual tasks. These software solutions contain everything small business invoice templates automated monitoring workflows that reduce collection times.
One of the best features of these solutions is the ability to automatically handle disputes and establish a clear audit trail that facilitates the compilation of financial statements.
In addition to collecting payments, midsize businesses have invested in platforms that automate inventory reorganization and cash management. Some of these platforms use AI to predict buying trends and alert businesses to when they need to source products.
Analytics for small businesses is more accessible than ever. Thanks to the democratization of data, Business Intelligence solutions have started to offer softer versions of their business offerings. As a result, even small business owners can now dig deep into their customer data and uncover trends that can help them tackle the next challenge they face.
Small business owners tend to take on challenges on their own and want to do everything on their own. However, the pandemic has brought to light the need to execute processes efficiently. Many homeowners found that their old DIY approach had no chance of working, and the only way to thrive was to hire jobs they weren’t good at.
This meant that many SMEs signed up for cloud-based services that offered bookkeeping, accounting and cash management. Leveraging third-party expertise is the new mantra for success in the SME world and it has significantly expanded the ecosystem.
Small business owners can now count on more professional services and solutions to help them run their business. Marketing is another area that has seen an increase in investment from small business owners.
With customers increasingly shopping online and with intense competition from online-only sources, small business owners have had to adapt to the digital marketing landscape. They found that online advertising isn’t just about uploading a few product photos and waiting for the clicks to arrive.
As a result, digital marketing expertise has grown in SMEs thanks to many business owners who have chosen to invest in them. The owners have even outsourced this task to agencies that cater to small businesses. The result is a better understanding of how online advertising works and a greater focus on what the business does best.
Positive and negative
There is no doubt that the pandemic has not been kind to SMEs. However, every cloud has a silver lining. As these trends show, the pandemic has offered small business owners a chance to adapt and become more resilient. Many homeowners have executed this perfectly and are poised to prosper when the world emerges from the COVID pandemic.
(Devdiscourse journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse assumes no responsibility in this regard.)