One day COVID-19 will be behind us. We will live in a new world shaped by the pandemic.
Small businesses of the future will be different to those pre-COVID-19 and how they evolved during the pandemic.
So, what will future small businesses look like?
We won’t be going backwards. Small business around the world had to adapt to survive the pandemic and many of the changes they had to make will form their future.
The new digital world
Lockdowns and limited movement meant many New Zealand small businesses had to look to an area many had ignored in the past – digitization.
From changing customer purchasing trends to businesses keeping their supply chains open, they had to go remote. And it’s going to stay. It’s estimated that the first half of 2020 saw an increase in e-commerce equivalent to that of the previous 10 years.
Vodafone estimates the Covid-19 lockdown has pushed digital adoption forward by at least two years.
Pandemic restrictions have seen some customers more comfortable with going online for their purchases. With this trend not only staying but increasing, businesses will need to keep abreast of the new world of e-commerce. Customers can expect to easily transact, interact and communicate with businesses remotely.
However, with the digital move comes some issues. Online customers may have less brand loyalty and may widen their search to various possible suppliers. Also, digital customers are getting used to trawling through online ratings and reviews.
“Online customers may have less brand loyalty and may widen their search to various possible suppliers”
It’s estimated that nearly 90% of potential customers read reviews for businesses and trust those reviews. Businesses may have to pay much more attention to this and respond rapidly.
Staying at home
The pandemic has seen new a phenomenon that is likely to become a new norm: working from home. A University of Otago study of 2,595 New Zealanders found that 73% of people felt “equally or more productive” when working from home during the lockdown and 89% wanted to continue post-lockdown.
Businesses found many of their employees were more productive than being in the office with less distractions and the ability to work at different times.
In the future, post-COVID-19, businesses will need to give employees the opportunity to work – at least partially - from home and make firm plans of how it will work.
In the rush to set up during the lockdown small businesses, in particular, were forced to carry out band-aid operations to accommodate remote working.
Future businesses may need to amend employment agreements and workplace policies; establish protocols for working from home; provide equipment and hardware; and, most importantly, upgrade their technology, much of which may currently be too clunky for the new conditions.
Fortunately, as we said earlier, innovative technology accelerated, ironically, thanks to the pandemic and will help accommodate the needs of home workers.
Entrepreneurship isn't dead
Although many small businesses didn’t survive the impact of the pandemic, we’ve seen, at the same time, a number of new businesses emerge.
History has shown that a crisis triggers innovation to overcome the problem of that crisis and provided opportunities for entrepreneurs, while traditional businesses have had to pivot to find new avenues to explore, regaining their entrepreneurial spirit.
We are already seeing this with COVID-19 and it’s likely we see more bright shiny businesses appear in the future.
Supply chains under spotlight
The pandemic revealed vulnerabilities in the long, complicated supply chains of many businesses relying on overseas suppliers. Delays in receiving components meant some businesses were also delayed in providing their products to customers.
The business of the future may be looking to simplify their supply chains or have backup chains, so they don’t have to rely on a single supplier.
China has dominated supplying New Zealand and most of the rest of world with material for our supply chains. The pandemic has made the focus of our reliance even more pronounced.
Spend, spend, spend
Consumers may be a little hesitant when we enter the post-COVID world but many businesses, especially in retail and hospitality, should be prepared for that to potentially change.
As consumer confidence returns, so may spending, with “revenge shopping” sweeping through sectors as pent-up demand is unleashed. We’ve seen this with previous economic downturns so the businesses of the future should be ready.
Likewise, people want to forget the dark times and will look for entertainment so the entertainment industry (and the increased use of streaming when we were lockdown) will need to gear up for the “happiness wave”.
Leisure travel is looking to bounce back once the borders are open. The trans-Tasman Bubble may have stuttered with states closing their borders, but many New Zealand tourist spots found themselves with a surge of Australian tourist bookings.
Previous economic downturns have seen leisure travel rebound. Good news for New Zealand where tourism is such a major economic contributor.
Another plus for attracting overseas tourists in the future is, ironically, thanks to the pandemic. Our handling of the crisis and our return to some form of normalcy has garnered a lot of international attention. New Zealand (buildings on its already “pure” brand) may be seen as an even more desirable country to visit.
However, business travel may be liable to have a much slower recovery and may even not return to previous levels. The pandemic saw businesses having to use virtual meetings and operate internationally remotely. It may have been inconvenient, but many businesses will reflect how much they saved on business travel and, with technological advancement we have seen, maintain a level of remote operations in the future.
“History has shown that a crisis triggers innovation to overcome the problem of that crisis and provided opportunities for entrepreneurs”
Previous recessions saw business travel take longer than leisure travel to bounce back. For example, with the 2008-09 financial crisis, international business travel took five years to recover, compared with two years for international leisure travel, according to McKinsey.com.
Future travel business (including hotels) may have to reconfigure their business model to tourists rather than business people.
What won’t change
Certainly, small businesses will look different when the pandemic ends but one constant may remain: people buy from small businesses because of the people who run small businesses.
Undoubtedly digitalization with online shopping and working from home, may see major changes to the businesses of the future. But even in the new world, it boils down to: people buy from people.
Small businesses especially have the human touch and, even though we are used to our new remote world, you can’t beat talking to someone when you are looking to buy a product or service.
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