6 Small Business Trends to Expect in 2021

By now, small businesses owners around the world are preparing for a new year characterized by change and uncertainty.  However, that doesn’t mean you should feel hopeless. Experts predict a number of potential trends to prepare for now, some of which signal valuable opportunities for small businesses to excel.

1. Remote work will have a long-term impact

The old saying goes “you live where you work”. But one of the major impacts of COVID-19 on workforces worldwide has been the rapid adoption of remote-work. To be clear, this change has been in the cards for many industries all along. But as cost of living and salaries have long been out of sync in many regions, the pandemic has undoubtedly served as a catalyst to accelerate change as more and more major companies slowly dial back on their idea of the traditional office. This will undoubtedly have a trickle down effect on work-culture as more and more small businesses follow suit.

Office buildings in cities like New York and Silicon Valley remain largely vacant as real-estate in smaller cities and towns across the country becomes increasingly desirable. As The Atlantic points out – a recent study shows as much as one-fifth of the workforce could be entirely remote after the pandemic, drawing talent away from major population centers. Some experts believe that this could lead to exciting new opportunities for smaller communities and the local businesses that serve them.

2. Regional supply chains will thrive

When it comes to global supply chains – China’s massive influence was made painfully apparent when trade with their nation came to a grinding halt in early 2020. As a result, industries of every variety are discovering the hidden cost in depending on single-source suppliers. Many predict this to give rise to regional logistics hubs with the goal of giving businesses a more flexible and adaptable supply-chain. Fortunately, these changes have already been underway partly due to rising labor costs in China. But in the same way COVID-19 accelerated attitudes toward remote work and flexibility, there is now a clear incentive to make a more focused shift.

Throughout 2021, small businesses will need to adapt by adjusting their mix of product, focus on higher-value items, and overhaul promotional tactics so as not to rely on a single, flagship product in order to preserve margins and stay flexible. A more varied supply chain can help accomplish this.

3. The strongest survivors will innovate proactively, and manage margins aggressively

If 2020 wasn’t proof enough, smart, proactive – even extreme – changes will be what separates the businesses that survive and thrive from those that struggle. A recent report by Mckinsey points out that these changes could be harder to manage for small businesses.

“Like Ginger Rogers, who danced the same steps as Fred Astaire, only backward and wearing high heels, small businesses will need to make all these changes at greater relative cost and with less working capital.”

(Source: Mckinsey)

Mckinsey goes on to remind us that many small businesses entered the beginning of the COVID-19 crisis grappling with “low financial resilience” with close to a third operating at a loss, or breaking even. When you add-in new costs for sanitation, adequate space for social distancing, and rapidly changing consumer behaviors – businesses in every sector will be rewarded by coming together, creating scale, and working on their margins actively and aggressively.

4. Businesses will continue to double-down on digital

In a recent survey by Bluehost, 72% of the small businesses polled reported optimism for the future – with much of the positivity focused on online sales and digital transformation. To rise to the challenge, respondents reported a renewed focus on being proactive about website modifications, expanded social media presence, and both modernized and re-imagined marketing efforts as a way to stay on their customer’s mind and generate new sales.

While big-box retailers and larger corporations may be able to take a larger hit to their margin to find and retain new customers, smaller local businesses don’t always have that luxury. For that reason, adapting low-cost and high-ROI promotional strategies like digital marketing will be key.

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5. Millennials & Gen Z become an even larger majority

If there’s one trend that has nothing to do with COVID-19, it’s the simple fact that both millennials and generation Z continue to make up a growing majority of today’s workforce and consumer base. In America alone, they make up over half of the population. If there’s one thing everyone knows about both groups it’s that they are tech savvy “digital natives”.

As more businesses grapple with changing dynamics in terms of reaching and retaining customers, digital and social media marketing experts will be key – one reason Linkedin now lists ‘digital marketer’ among its most in-demand jobs alongside tech and data adjacent roles, including: software developer, sales representative, project manager, IT administrator, IT support/Helpdesk, data analyst, and graphic designer (source).

This means a lot for businesses operating in 2021. When engaging these groups as employees and as customers, businesses will be rewarded by an approach that considers both their relationship to technology and the notion that “good business” and social responsibility go hand-in hand.

6. Automation will level the playing field

One of the greatest differences between “big business” and “small business” is the people-power to handle vital but time-consuming tasks like bookkeeping, marketing, and hiring without losing sight of strategic growth initiatives.

With the rise and continued evolution of automation software, small businesses now have the power to flexibly replace labor-intensive processes with automation to level the playing field. While you might think “automation software” sounds expensive – that couldn’t be further from the truth. Countless solutions have entered the market focused on providing affordable options so small businesses can stay focused on the big picture without getting stuck in the weeds of payroll, bookkeeping, hiring, email marketing, and so much more.

It goes without saying that 2021 will be a “New Year” unlike any we’ve experienced in a long time. With new challenges and opportunities around the bend, small businesses across the country will be getting creative, flexing their local advantage, and adapting on-the-fly to stay strong and nimble. Will 2021 be the year you get ahead of the pack?

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