What Companies Can Learn From the Resiliency of Small Business
- Small businesses make up 4.3M of 8.0M establishments in the US and have 1 to four employees.
- Nearly one-third (31 percent) of small businesses in the US are currently not operational.
- 43.9% of businesses reported that covid had a moderate negative effect on business.
Uncertainty majorly impacts small business operations. The pandemic brought uncertainty to extremes. First, businesses determined how to operate with employers remotely working, or how to sell their goods with little to no contact with the public. The major supply chain issues disrupted the flow of goods when demand was increasing. Small businesses had to pivot, find alternative sources, or remove goods from offer completely. Finally, labor shortages and the great resignation led to a shift in the workforce and employee expectations. Zaid Rahman, Founder & CEO at Flexbase noted that “In covid, these white-collar companies, Wall Street Companies, did well. Whereas small businesses, such as Main Street did poorly. They did so poorly that they are coming off of two years of the pandemic much more resilient and stronger than ever before.”
In 2019, small businesses with one-four employees accounted for 4.3M of 8.0M establishments in the US (US Census). Oberlo reported nearly one-third (31 percent) of small businesses in the US are currently not operational. But the businesses that have survived the hardships of the pandemic are some of the most resilient.
The Small Business Pulse Survey from the US Census collected sentiment on four indexes between 2020-2022. Regarding the pandemic, business owners reported on Overall Sentiment, Operational Challenges, Financial Stress, and Expected Recovery across a range of industries. Of the responses, 43.9% reported that covid had a moderate negative effect on business.
Since small businesses are more nimble than large, fortune-500 counterparts, they thrive when they harness flexibility. “I think that these companies have already seen the worst that could happen,” said Rahman. Risks will always be a part of operating a small business. 20% of small businesses that start fail within the first year (US Census). The operations that have endured the abrupt changes from covid are more ready to mitigate and address future risks.
To remain resilient small businesses should have plans in place for future disasters. Consider holes and weak links in operations and create a plan for large disasters. Preparation will help the business address monumental changes or natural disasters. The Association of International Certified Professional Accountants recommends keeping up with cybersecurity and tech changes, offering hybrid or remote work to employees, and becoming strategic in cashflow ideas for ‘what-if’ situations. The businesses that survived the pandemic are a great example of these characteristics. “Now they’re [the small businesses] in a much better place to capitalize on the significant demand that consumers are showing post-pandemic,” said Rahman.
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