Outlook 2021: 5 key small business trends to help revive, regain momentum in the post-Covid year
Updated: December 24, 2020 12:29 PM
Ease of Doing Business for MSME: The pandemic has forced many small business owners to run their businesses in a more lean and efficient manner, leading to a permanent shift in their operating landscape and increasing the demand for digital adoption.
Small businesses have long been recognized as an essential source of employment, and as being vital for the Indian economy as a whole. (Representative image)
By Nikhil Arora
Ease of Doing Business for MSME: In the past few years, India has seen an emergence of startups and unique confidence in ideation from entrepreneurs. In the 2019 GoDaddy Global Entrepreneurship Survey, Indian entrepreneurs were the most optimistic globally about growing their business by at least 50 per cent in the next three to five years. However, with the chaos and breakdowns unleashed by the pandemic this year, the future now seems unpredictable. The pandemic has forced many small business owners to run their businesses in a more lean and efficient manner, leading to a permanent shift in their operating landscape and increasing the demand for digital adoption. Additionally, the increase in the number of technology-driven customers, due to the restrictions, has led to an urgency for businesses to have an online presence and strategy.
Going forward, small businesses will have to develop a new set of skills along with the ability to be more robust, swift, and flexible to face uncertainties that may come their way. The state of the e-commerce industry will see a boom in the coming year, with small businesses focusing on online websites that enable them to sell on social channels. This will require small business owners to create flexible strategies and adopt new digital tools to design and drive new processes, all aimed at helping their business recover and grow.
Despite an unprecedented year in terms of changes and challenges, small businesses in the country are working hard to regain their momentum and get back on track for 2021. According to GoDaddy’s 2020 Global Entrepreneurship Survey, more than 60 percent of Indian small businesses surveyed are confident that their business will continue running, despite the slowdown and negative impact brought on by the pandemic. Persistence and recovery in the post COVID world are definitely possible, but preparation is critical. Embracing the new normal, accepting the shift in consumer behaviors, and adapting to new online models are all vital aspects of such preparation. Following are some trends to monitor as we head into 2021:
Accelerating digital adoption
The pandemic has given birth to the second wave of e-commerce adoption. According to a report by Forbes, people are already spending more time online than ever before, and internet usage has surged by 50-70 per cent. With consumers continuing to practice social distancing, businesses have seen an increase in digital transactions and are revamping their models to find different avenues to reach their customers. India will witness further cycles of rapid technology adoption and onboarding of businesses on e-commerce platforms, with a focus on the direct-to-consumer approach to selling online. The adoption of digitalization will be key to transforming small businesses to be more competitive and resilient in the future.
Dependence on Government Initiatives
Small businesses have long been recognized as an essential source of employment, and as being vital for the Indian economy as a whole. Government initiatives like Start-Up India, Make in India, and Vocal for Local have all incentivized existing small businesses as well as upcoming entrepreneurs. The government also recently announced the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs, businesses, MUDRA borrowers, and individuals (loans for business purposes), up to March 31, 2021. Such government initiatives give many small businesses in the country the critical opportunity to grow and revive themselves.
Prime Minister Narendra Modi has consistently reiterated India’s vision to push for local production and domestic manufacturing with a focus on exports. We foresee the trade industry to remain export-driven and present various opportunities for micro and small businesses at every step of the way. By doing this, the government is not only encouraging manufacturing and selling of products ‘made in India’ by small businesses but also inspiring them to establish their presence online to sell, widen their customer reach and grow their businesses further.
One of the key challenges during the pandemic was businesses’ financial ability to last the lean months until lockdowns opened. Strong business foundations have now become crucial for survival in these challenging times. While many parts of the economy have started reviving, many businesses are still struggling for financial aid and survival. Going forward small business’ savings and planning for the future will be a key to success. Entrepreneurs need to learn to shore up savings to be able to stay in business even during emergencies. Quarterly financial health checks can help them meet their growth ambitions and optimize their working capital.
New Age Marketing Tools
Along with adopting digital tools and processes, businesses need to adapt to the newer ways of reaching existing and new customers. The internet takes away traditional boundaries of time and place of customer engagement, and businesses should use this to shape their online presence. While COVID-19 pushed traditional businesses to create an online presence, they need to learn how to grow their online presence by staying active and engaged online. Having a business website along with a social media presence can be a very powerful combination of tools to help expand their reach.
Venturing into new verticals
Out of the box ideas and venturing into untapped and niche sectors will be key for emerging entrepreneurs and small businesses. According to a recent study by NASSCOM, three-fourths of business-to-business startups are developing new products and trying new verticals. In the new normal environment, many small businesses may pivot to new directions such as education, technology services, FinTech, and more. With this pandemic, many businesses have realized that it is important to add new verticals to their business to help sustain for the long run.
The chaos may have simmered down, but we can expect to feel its effects for some more time. Small businesses need to maintain a positive outlook and remain hopeful about reviving their business or kick-starting things again, if need be. By leading the way, innovating, remaining agile, and adapting to emerging trends, small business owners can stay ahead of the disruption. With more government initiatives, seed investments, and a positive outlook, businesses can be positioned to flourish in ways not seen before.
Nikhil Arora is the Managing Director & Vice-President of GoDaddy India. Views expressed are the author’s own.