Small Business Boom: ‘Pandemic Founders’ Will Determine the Next Beloved Tech Brands
Call it a silver lining of the pandemic: Entrepreneurship is booming in the U.S, with applications for new businesses rising at the fastest rate since 2007.
The pandemic itself is the likely accelerating factor, given that unemployment rates are still near 8%. Many of these folks are forgoing the job search in favor of striking out on their own and pursuing their passions, with 27% of “pandemic founders” indicating that they were previously laid off from their full-time jobs, according to a recent survey by JustBusiness.
More than half of this new crop are first-time founders, with 1 in 5 (20%) saying that they did not have plans to start a business at the beginning of the year. In that sense, you could say that the pandemic has been a direct catalyst for their current ambitions – a spark plug that has motivated folks to seize the moment.
Even among the experienced founders, 70% said the pandemic altered their business plans or forced them to make changes that may impact their success. Whether that means shutting down just months (or weeks) after opening or postponing a launch altogether, it hasn’t been easy. There’s no denying that we’ve all been through a trauma – something the small business ecosystem will likely feel in various ways for years to come.
As a result, today’s founders are stepping into entrepreneurship with fresh eyes and heightened expectations of all vendors, mirroring how today’s young consumers have higher expectations in terms of mobility, user experience and general internet savvy from the brands that serve them. 2020’s founders’ preferences will reflect the on-demand nature of our current culture, favoring instant gratification, flexibility, scalability and ease of use from any company that hopes to be included in their tech stack.
This shift is creating a massive opportunity for the tech companies that serve and support the small business ecosystem. As business owners, our preferences and tendencies will directly influence which tech companies emerge as winners, securing a spot in our startup toolboxes, while pushing out legacy partners who have failed to adapt.
While the COVID-19 pandemic is unprecedented in our lifetimes, the economic recovery situation and corresponding land-grab for small business attention is not. We need only look back at history for some semblance of what we can expect over the next few months.
The new barometer for risk
In 2008, I was 28 years old, living and working in London on my first startup, eCourier. It was a simple idea: a courier network, empowered by mobile, that could field orders programmatically. We raised money and had a thriving business that was all about growth. Needless to say, when the recession hit, it all came crashing down. Today, I’m on my third startup, and I still think about how that chaotic period carved out many of my entrepreneurial tendencies that I maintain today.
Today’s founders will undoubtedly have a similar experience, with various effects of the pandemic lingering for years to come. These are folks who just saw their friends and neighbors go out of business, who perhaps recently lost their own jobs, or who put their plans and dreams on indefinite hold because of COVID-19 before admirably deciding to power through.
As a result, their barometer for risk has been completely reset. Over the past few months, I’ve talked to many business owners who are trying to save more money, creating a bigger cushion for themselves in the event of a second wave and additional shutdowns. It’s not an easy thing to do, and it does require sacrifice and perhaps less focus on growth – but this could be what keeps you afloat in the coming months.
Accordingly, these owners are a bit more hesitant to hire aggressively right now. Growth is always a crab walk, especially when margins are slim. While entrepreneurship is booming right now, I expect the hiring curve might take a bit longer to catch up. In the meantime, there should be plentiful opportunities for freelancers, contract workers and the gig economy in lieu of full-time jobs.
Along those same lines, folks will take a harder line on physical office space, only investing in one if it’s absolutely necessary for their business type. This tells me two things: Firstly, flexible leases are the future. Why commit to a year when you’re not sure you’ll be open in a few months? Secondly, on-demand meeting space could be in line for major growth, thanks to shifting business demands and how meetings might take place in 2021.
I’ve also learned that small businesses are less likely to spend money to “test and learn” with technology right now. The impact here could be more “freemium” models from tech providers, encouraging small business owners to get set up with a product and understand its value before opening up their checkbooks. From there, it will be more about flexible subscriptions than annual contracts, putting the power back into business owners’ hands.
The modern startup toolbox
A similar evolution happened for us founders back in 2008. We had to reset and reassess. Along the way, clear winners emerged. Square is a fantastic example: born of the Great Recession, designed to help nascent businesses get over the unnecessarily complicated hurdle of accepting credit cards. As with office rent, why would you lock yourself into a long-term contract with a point-of-sale system provider when you’re not sure if you’ll be in business in six months? Why not work with something much simpler, easier to use and more flexible in its contract?
Going back a bit further to the dot-com burst, Mailchimp was founded in 2001 and emerged as a clear winner with small businesses. Like Square, Mailchimp was an excellent alternative to expensive, complex competitors that ruled email marketing at the time, with a laser focus on simplifying processes and empowering small businesses.
The same thing will happen in the wake of the pandemic. Beloved brands will emerge because they help businesses clear ridiculous hurdles. The hurdles themselves aren’t new, but the consequences of not clearing them are much more profound. This is 2020, and there isn’t a safety net. More than ever, business owners are looking for solutions that simplify their hectic lives, offer flexible payment structures and don’t create too much additional overhead.
On the flip side, we’re going to see a mass migration away from outdated legacy products. If it’s slow and clunky, it’s on the way out. For example, in the world of insurance, small businesses are battling their insurers in court over unpaid claims relating to pandemic interruption. In the commercial real estate sector, major brands are destroying their reputations with their inflexibility. These brands are losing any goodwill they may have had with small business owners, creating space for innovators to come in and win market share.
As business owners, we have the power to define what that modern startup toolkit looks like. We are the judges and decision-makers on the beloved tech platforms of 2021 and beyond. The B2B winners will combine flexibility, scalability and subscription models that reflect B2C preferences, helping businesses to clear useless hurdles while simplifying processes along the way. [Looking for more tips on weathering the pandemic? Check out our resources and insights on running a business during COVID-19.]
Original Source: business.com
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