How has COVID-19 affected businesses?
Small businesses represent over 90% of all companies globally. They shape our lives, infusing character and personality into our communities. Small businesses are resilient and creative in how they serve customers, but they’re also vulnerable – something that COVID-19 has made even more apparent.
Xero commissioned The Next Chapter for Small Business study by Forrester Consulting to uncover the true impact of the pandemic on small businesses.
Five key recommendations
Over 1,000 small business owners with fewer than 100 employees, and 1,000 consumers who use or work with small businesses each week were surveyed. The report highlighted several areas where thriving businesses excel – from having up-to-date digital financial records, to engaging with their ecosystem, and adopting technology.
The study offered five key recommendations to help small businesses recover and practical advice for business continuity, resilience and success.
1. Make financial information digital
Using digital tools is no longer an admin task, it’s business critical and has a direct impact on whether a business will survive.
During COVID-19 74% of small business owners used government funding to stay afloat. Cash flow is the biggest issue for small businesses. In order to access government support businesses needed to have financial statements showing revenue, cash flow and payroll.
2. Create emotional connections with customers
Creating meaningful connections with customers strengthens relationships.
The study found 93% of consumers said that if businesses demonstrate empathy they trust them, buy from them more and recommend them more.
3. Use the power of your ecosystem
Small businesses need to be resourceful. Developing partnerships within the ecosystem can help meet customers’ changing needs.
According to the study, thriving businesses were most likely to get help from their ecosystem partners.
4. Use cloud-based tools to increase efficiency
Manual, paper-based systems are time-consuming, environmentally unfriendly and labour-intensive.
Businesses that thrived during the pandemic showed a higher percentage of online revenue as well as cloud adoption.
5. Use data to predict and plan for the future
47% of businesses make decisions based on customer feedback while 34% use their own instinct.
Typically small businesses are unprepared to deal with supply chain disruptions, but using data to make informed decisions can help businesses plan for the future.
See what other small businesses are doing to survive and thrive.
Expert advice: find out more about how the study can help you
Xero Chief Customer Officer, Rachael Powell talks with Forrester Consulting about the study’s findings.
Tune into Rachael Powell’s conversation with Zhi-Ying Barry and Diane Deng from Forrester Consulting the impact of COVID-19 to small businesses and their customers , and what steps small businesses are taking to survive, and in some cases, to thrive.
Rachael Powell and Zhi-Ying Barry and Diane Deng from Forrester Consulting discuss how digital technologies, and in particular cloud or web-based tools, have been critical to many small businesses operating successfully throughout so much disruption.
Rachael Powell and Zhi-Ying Barry and Diane Deng from Forrester Consulting discuss why creating meaningful emotional connections with customers is critical to small businesses survival.
Rachael Powell and Zhi-Ying Barry and Diane Deng from Forrester Consulting discuss how consumers’ expectations of small businesses have shifted and what this means for small businesses now and in the future.