For consumers, shopping small has never been easier as businesses have taken on digital solutions that allow shoppers to buy online — which drove 80 percent of holiday shoppers to plan on shopping from small businesses in 2020.
At the same time, more small businesses have entered the market with a notable start-up boom emerging during the pandemic as people worked to turn passion projects into lucrative businesses. In fact, according to data from Kabbage, an American Express company, one in three workers who have quit their job during the pandemic plan to start their own businesses, and in the U.S., a record number of new businesses in 2020 with an increase of 24 percent from the year before.
“We’ve seen record business starts since the pandemic,” said Kathryn Petralia, cofounder of Kabbage. “Whenever large events that impact entire nations occur, it’s often a time of reflection and recalibration, and I think we’re seeing that play out as so many rethink their careers and pursue their own companies.”
Moreover, Petralia said, small businesses represent 99 percent of all U.S. businesses today, make up two-thirds of all new jobs in America and generate half of the nation’s economic activity.
“Yet, we’ve primarily seen a K-shaped economic recovery, where Wall Street regains its footing, but Main Street still struggles,” Petralia said. “Small businesses will eventually bounce back — which, many either already have, while others grew during the pandemic — but there’s no doubt they play a vital role in our economy.
“Our suite of digital cash flow solutions is designed to help small businesses efficiently run their business from a single platform, and Kabbage Funding offers convenient funding whenever they need it. We also provide online business checking accounts, bill pay, payment processing solutions and cash-flow prediction analytics.”
Today’s small businesses are facing an array of challenges from labor shortages to negative cash flow and supply chain issues. In the company’s most recent Small Business Recovery Report, which looked at the recovery and growth outlook for U.S. small businesses through 2022, data highlighted some of these challenges and revealed the complexities of today’s small business owners in everyday operations.
Notably, as job openings spiked across the country small business owners reported difficulty filling them is also rising.
“Our survey found 32 percent of small business leaders reported it’s very or somewhat difficult to fill open roles, which is up from 28 percent last report,” Petralia said. “Respondents said a primary reason is that candidates are not qualified (32 percent), which is more than double the responses from the last report (14 percent). The same percentage of respondents said hiring is difficult because candidates have obligations at home to care for their children or family (32 percent), and that candidates do not feel safe returning to work (29 percent).”
The ongoing hiring challenges are taking a toll on workers’ hours, too.
According to Kabbage’s report, 40 percent of small business leaders said their existing employees are working significantly longer hours to compensate for the lack of help — which is nearly double the responses from the last survey (24 percent).
Still, “every company, in every industry and region has had to pivot in some way to adapt to the new normal,” Petralia said. “What has struck me the most since the pandemic is the resiliency of small businesses. They’ve carried the brunt of the economic impact, yet so many have shown ingenuity to adapt and continue to grow.”
In part, Petralia told WWD that small businesses have been able to launch successfully due to embracing digital channels and platforms.
“Our first Small Business Recovery Report found the shift to online was a critical factor in SMBs reopening after the initial shutdown,” Petralia said. “Prior to the pandemic, entrepreneurs said their average monthly online sales represented 37 percent of total revenue. In February 2021, those numbers jumped to 57 percent, a 54 percent increase in less than one year. The mass shift to selling online has changed the mind-set of small businesses about adopting new technologies, replacing old systems and finding new ways to run their companies more efficiently.”
And consumers’ desire to shop small has also gone a long way.
“Even in my own neighborhood, there are signs up that were never there before thanking small business owners for all that they do in our community,” Petralia said. “There’s been a resurgence of strong sentiment for small businesses throughout the country as everyone has seen firsthand how the pandemic has affected the businesses they love most in their area.”