By Barry Moltz
Beginning in March 2020, lockdowns and restrictions from the COVID pandemic devastated small businesses all over the world. Most companies had to close or severely restrict their operations for a period. According to the Worldpay from FIS SMB PACE Report, decreasing hours, reducing occupancy of retail locations and limiting the number of customers due to staff shortages resulted in lost revenue for most businesses − especially for restaurants and any in-person services or activities. Over half of small business owners had to use personal funds to make it through the pandemic. For example, Sean and Thora Dowdell of Club Tattoo spent hundreds of thousands of dollars to save their six locations across Nevada and Arizona. In addition, over 40% of businesses had to rely on some form of COVID-related financial aid from a government entity.
Businesses Began Digitalization to Survive and then Thrive
The COVID pandemic also forced rapid – and rare − technology innovation in cash-strapped small businesses. Most businesses went online as their primary sales channel. In-person service businesses, like exercise classes, doctor appointments and babysitting, were also done through video conferencing applications like Zoom or Microsoft Teams. High-end restaurants put their menus online and started to offer takeout services. In Chicago, I was able to get food delivered from restaurants where I could previously never get a reservation!
According to the Worldpay from FIS SMBPACE Report, about 60% of businesses responded to the pandemic by opening new lines of business or changing their products or services. Three-quarters of businesses say they benefited in some way from customers changing their buying behavior. For example, restaurants no longer offered menus to diners, but had them scan a QR code to look up menu options on their phones. Almost every restaurant offered outdoor dining. Flight attendants welcomed passengers with sanitizer wipes so they could clean their own seats when boarding.
Some restaurants started to sell groceries. Shuttered minor league baseball stadiums became outfield restaurants with “Dinner on the Diamond” promotions. Clothing manufacturers started to sell fashion-friendly masks. Every retail location practiced some form of omnichannel marketing by making it easy for customers to order online and get curbside pickup.
The pandemic also had other benefits. According to The Worldpay from FIS SMB PACE Report, employee productivity and business efficiency went up with work from home. Team members no longer had to commute to an office and online meetings were shorter. Companies also rapidly invested in technologies, such as video conferencing, online marketing promotions and marketing automation.
Expanding Electronic Payments as a Competitive Advantage
Commerce changed drastically in 2020 with the pandemic. According to the Worldpay from FIS SMB PACE Report, it was the first time that online sales exceeded face-to-face sales. A study by PWC predicts that global cashless payment volumes will continue to double from 2020 to 2025, to almost 1.9 trillion transactions, and will almost triple by 2030.
Fear of spreading the disease finally drove further and more rapid adoption of technologies, such as contactless and mobile payments with digital wallets (Apple Pay, Google Pay, and Venmo), instead of using physical credit cards, checks or cash. One of my favorite changes was being able to pay my restaurant bill through a QR code at my table without presenting a credit card or signing anything. In this way, small businesses used a broad variety of electronic payments to create an advantage over their competitors.
While more face-to-face commerce is expected in 2022, many customers will still prefer to do business with the same online self-serve method. This means that small businesses need to make it easy to accept electronic payments to boost convenience and loyalty.
Accepting a wide variety of electronic payments from customers is central to business success going forward. According to the SMB Worldpay from FIS PACE Report, 73% of online businesses feel it’s important for their survival to adopt and accept new payment types.
The leading innovation is embedded payments in a company’s online marketplace, which allows customers to pay inside their website. In addition, there’s “social commerce,” where companies sell their products and services inside their social media posts. According to Insider Intelligence, almost 36% of U.S. internet users will make at least one social commerce purchase this year. Facebook is the top social commerce platform, with $56 million in sales. Other innovations making it easier for customers to purchase are peer-to-peer payments (Venmo and Cash App), text to pay (Podium and Weave) and cryptocurrency.
Staff Shortages Drive Technology Adoption
According to the Worldpay from FIS SMB PACE Report, nearly all businesses say they expect to adopt or improve their technologies in the next 12 months. One of the reasons is that finding enough people to staff a small business is the biggest challenge facing owners today. This is being called the Great Resignation,” as employees are deciding they want to do something different than what they did before the pandemic. This has forced the rapid implementation of new technology-driven processes to power increased productivity in every business. These include online appointment scheduling, automated payment collections and online delivery instead of in-person personal services.
Most profitable businesses only change when they are forced to − and the COVID pandemic certainly imposed plenty of reasons to do so. Implementing those changes will continue to provide the key to thriving in 2022.