7 ways businesses are adapting to the impact of coronavirus
There’s no doubt about it – the coronavirus’ business impact has been monumental.
Lockdown measures forced SMEs to adapt dramatically overnight. Consumer habits drastically changed as businesses scrambled to meet new demands. And the shift to digital communications and working-from-home has transformed the way SMEs operate.
The impact of COVID-19 on small businesses has created unprecedented challenges.
According to Salesforce’s 4th edition of the SME Trends Report, the coronavirus pandemic has created numerous constraints for SMEs, such as reduced revenue (56% of respondents), reduced customer demand (54%), public health mandates (38%), and supply chain disruptions (32%).
The result? The coronavirus has forced SMEs to adapt quickly. But how has covid-19 affected small businesses exactly? Here are seven ways.
1. SMEs are investing in technology
With such massive changes sweeping the SME landscape, businesses need accurate and actionable data now, more than ever. To put it another way, when the ship starts sinking, you need to know exactly where the holes are and how to fix them – fast.
What’s more, with frequent drops in consumer spending, companies are desperate to retain existing customers and find new ways to differentiate from competitors. And one of the best ways to do this is to improve the customer experience.
For these reasons, leading SMEs are overwhelmingly embracing new technologies like customer relationship management software (CRM), which can help improve customer service and streamline sales operations.
In fact, according to Salesforce’s survey, adoption of CRM systems by SMEs has risen a whopping 24% since 2019, with more than half of respondents now using a CRM.
But CRMs aren’t the only technology that SMEs are investing in.
Since the pandemic hit, around one in five SMEs started using email marketing software, customer service software, project or task collaboration tools, ecommerce software, or marketing automation tools. Plus, at the time of the survey, one in five businesses that weren’t using these technologies had plans to start using them within 12 months.
The takeaway? Actionable data-driven insights, operational efficiency, and stellar customer experience are more important than ever – and technology can help.
2. Businesses are moving online
Public health mandates have forced many businesses to close for extended periods, and the increase in social distancing has decimated revenues for many SMEs.
According to Shopify’s Future of Ecommerce 2021 report, 46% of consumers said they feel uncomfortable shopping in-person. Of those who shopped in-store, 38% are doing so less often than earlier in the year.
Consequently, SMEs aren’t just adopting new technology to improve their businesses – many are also expanding or transitioning to ecommerce.
In May 2020, the co-founder and CEO of Facebook, Mark Zuckerburg, unveiled Facebook’s new ecommerce feature, Facebook Shops. During the address, Zuckerburg said:
“We’re seeing a lot of businesses that never had online presences get online for the first time, and we’re seeing small businesses that had an online presence now make them their primary way of doing business.”
Additionally, the number of new stores being created on Shopify’s ecommerce platform surged in 2020, growing a massive 71% in Q2 2020, compared to Q1. Shopify also welcomed a record number of merchants to the platform in Q3.
The best part? Shifting to ecommerce is a winning strategy for SMEs.
Shopify states that “retail merchants replaced 94% of Point of Sale (POS) sales lost in the first six weeks of the pandemic with online sales.”
Bottom line, ecommerce has been growing steadily for decades, but the coronavirus pandemic has added fuel to the fire. And many consumers now expect businesses to offer an ecommerce option.
3. Online payments are growing
Research has found that COVID-19 can survive on money for up to three days under optimal conditions. So, many people now actively avoid using cash whenever possible.
In fact, Shopify discovered that 62% of consumers feel more comfortable making in-store purchases with digital or contactless payment methods. The pandemic has also increased the number of shops offering contactless payments with Shopify by a huge 122% compared to the same period in 2019.
This shift towards online payments also extends to the way businesses manage their finances.
Established SMEs are flocking to modern online payment services to pay business expenses. Why? In short, innovative online payment services like Neat can meet SMEs’ changing needs.
All in all, businesses and consumers now overwhelmingly prefer digital payments due to safety concerns. And SMEs are taking advantage of new online payment solutions to improve their financial operations.
4. Businesses are shifting to remote work arrangements
When the pandemic first hit in early 2020, the risk of infection and public health mandates forced many businesses to close their doors and rethink office spaces. Consequently, many SMEs, as well as large companies like Adobe, Facebook, and Microsoft, all made sweeping policy changes to allow employees to work from home.
Statista reports that, before the pandemic, 17% of employees worked from home five days or more each week. However, coronavirus’s impact on businesses increased this number to 44% – more than double.
And these changes seem like they’re here to stay.
A survey by Bloom estimates that remote work will become more than four times as common after the pandemic subsides, increasing from 5% to 22% of workdays.
News outlets have fondly referred to this historic rise in remote work as the great “work-from-home experiment.”
Now, it’s fair to say that many businesses feared – and still fear – that work-from-home arrangements will result in decreased productivity and output. However, studies have long suggested that teleworkers tend to get higher performance evaluations than office workers.
Statista also reports that almost 45% of those surveyed believe they’re more productive when working from home instead of in an office. And roughly 21% of respondents feel that there was no change in their productivity when switching to working from home.
In summary, remote work’s adaptability and benefits mean that it’s here to stay. And SMEs who can develop effective remote work cultures are sure to gain a significant competitive advantage.
5. Digital communications are booming
With many businesses closing their doors and shifting to ecommerce and remote work, in-person communication has taken a massive hit.
And with businesses struggling to communicate effectively, online communication apps and video-call software like Zoom, Skype, and Google Meet have rushed to fill a new gap in the market.
Other software companies like DocuSign – an app that allows companies to manage written agreements online – and team chat apps like Slack have also boomed.
Dan Ives, the technology sector managing director and senior equity research analyst for Wedbush Securities, told Yahoo! Finance:
“Work-from-home companies will forever be known in investors’ minds because of the pandemic. It put companies like Zoom (ZM), Slack (WORK), DocuSign (DOCU), among others, on the map.”
In the image below from Yahoo! Finance, you can see the stock boom companies like Zoom (ZM), Slack (WORK), and DocuSign (DOCU) have enjoyed.
But it’s not just internal business communications that have moved online. SMEs are also paying more attention to customer communications.
According to Salesforce, 55% of SMEs are more careful with their customer communications since the pandemic started, and 47% have expanded their customer communication channels.
Plus, interactions between businesses and customers increased by a massive 85% on Shopify Ping – the platform’s chat application (compared to the same period prior). And the number of businesses using the app to engage with customers increased by 72%.
The additional attention businesses are giving to customer communications seems to be paying off, too – Shopify found that sales attributed to chat increased by 185%.
It’s easy to understand why.
Salesforce discovered that 77% of those surveyed believe the coronavirus crisis should be a catalyst for business improvement, and 66% of respondents expect companies to understand the customers’ unique expectations and needs.
Here’s the gist: Effective communication is vital to operational and sales success, and online tools can help.
6. SMEs are adapting to new safety measures
Many SMEs still need to run in-person operations. In particular, brick-and-mortar stores, travel services, and the entire hospitality industry had to find ways to operate safely.
Social distancing and sanitisation measures suddenly became part of everyday life, and businesses had to take the lead. Salesforce’s report found that 64% of SMEs are focusing on safety and sanitation policies, and 59% are working to meet public health mandates.
Shopify found that many businesses are offering alternative pickup and delivery options. For example, 23% of consumers who shopped online picked up their items in-store or curb-side. And 30% of these people did so for the first time since the pandemic was declared – illustrating yet another dramatic shift in consumer behaviour.
Complying with local health mandates and ensuring employees and customers’ safety is now a top priority for SMEs. Only time will reveal how many of these measures stick around for good.
7. Businesses are focused on future-proofing
The world turned upside-down overnight and took SMEs by surprise. Undoubtedly, those who were unprepared had to struggle harder to stay afloat.
However, many businesses are determined not to make the same mistake twice and are actively preparing to handle future crises.
Specifically, Salesforce found a few critical challenges on SMEs leaders’ minds: maintaining financial growth, meeting customer experience expectations, and hiring and retaining employees.
So, how are SMEs dealing with these challenges?
Aside from adopting technology, 30% of SMEs have begun to plan for different scenarios, 27% have started to set aside an emergency fund, and 19% have shifted their business model.
The coronavirus’ business impact was unprecedented and shocking. However, the crisis has also demonstrated to SMEs what happens when unprepared.
It’s always possible that another disaster is just around the corner – after all, as the ancient Greek philosopher Heraclitus once said, “Change is the only constant in life.”
For these reasons, SMEs must take necessary precautions to protect the business and employees’ livelihoods should another crisis arise.
Summary: Coronavirus’ impact on businesses
It’s fair to say that the coronavirus’ impact on businesses has been extreme, swift, and unrelenting. In summary, here are seven ways COVID-19 has dramatically changed the way we do business:
- SMEs are investing in technology, such as CRMs, email marketing, ecommerce solutions, and marketing automation tools.
- Businesses are moving online and taking advantage of a variety of ecommerce channels.
- SMEs are shifting to online payments and alternative payment services, like Neat, that provide competitive advantages.
- The great “work-from-home experiment” has made SMEs more open to remote work arrangements.
- Businesses are becoming more reliant on online communication apps as remote working becomes the new normal.
- SMEs are channelling resources into complying with public health mandates and keeping employees and customers safe.
- Forward-thinking SMEs are taking measures to protect the business against future crises.
When the dust settles, one thing’s for sure: the SME landscape won’t reset back to how it was before the pandemic. Consumer preferences, business approaches, and the very fabric of society have transformed.
The final word? To succeed in such turbulent times, SMEs must become highly adaptable and open to change.