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Survey Results – COVID-19 Ignited a Small Business Renaissance

Survey Results – COVID-19 Ignited a Small Business Renaissance

Contributed by Enrique Ortegon, Senior Vice President, SMB at Salesforce, leading the sales team focused on helping small-and-medium-sized businesses grow and succeed with easy-to-use CRM technology that scales with their business.

We’re all aware of the havoc the COVID-19 pandemic wreaked on small businesses and the global economy in general. The pandemic touched every industry and business on Earth last year, but some felt it more than others. According to the United States Small Business Administration, coastal and metropolitan areas of the U.S. were hardest hit, as were restaurants, taxi and limousine services, and Black and Asian-owned businesses.

But there’s an emergent silver lining to this story: COVID-19 sparked a small business renaissance. Despite all the restrictions brought on by the pandemic, new small businesses sprung up at a rapid clip. A whopping 4.4 million new businesses were started in 2020, representing a 24% increase over the previous year.

Salesforce surveyed more than 200 people who founded a company in 2020 to learn about their experiences. What did we find out? Entrepreneurs are incredibly resilient and resourceful. That is what makes SMBs the foundation of our economy and the fabric of our society. Not even a worldwide health and economic crisis could snuff out the flame of an entrepreneur’s dream. Just ask the more than 50% of survey respondents motivated by the chance to be their own boss.

Let’s look at some of the specific data that paints a more detailed picture of the people and motivations behind the COVID startup boom:

Barriers to entry have never been lower

Our digital-first world makes it easier than ever to start a new business. Instead of a physical storefront and grand opening event, all an entrepreneur needs to launch a new business is an email list, social media profile, and CRM software to keep track of leads and customers.

Some key stats that define the digital-first startup wave of 2020:

  • An overwhelming majority of these new businesses are “Digital First.” 70% of the founders we surveyed said their company was either born out of technology or tech-focused from day one.
  • Following in the footsteps of household names like Casper and Warby Parker, more than half of these businesses opened without a physical storefront (61%). Almost a third of them (30%) said they don’t think they’ll ever have one, either. This might seem surprising, given the abundance of available retail space — and plummeting rents — brought on by the pandemic, but e-commerce has truly changed the face of direct to consumer retail.

What kinds of businesses?

What sorts of new businesses sprang up during 2020? Just about every kind you can imagine. Direct to consumer is a hot category, both for the reasons I mentioned above and the fact that consumers found themselves doing more online shopping from home last year. But the startup boom touched virtually every industry imaginable, in fields ranging from software and technology to healthcare and retail.

The numbers help us dig a little deeper:

  • Was 2020 the year of the passion project? More than two-thirds of founders we surveyed (63%) started businesses in entirely new industries, with only 37% staying within a category they already understood.
  • A vast majority of the business (80%) are targeting consumers, not other businesses, for sales and growth.
  • Only 13%, or roughly one in ten, entrepreneurs seized on a specific opportunity created through pandemic-driven conditions.

Will they last?

As anyone who’s ever launched a business can attest to, getting started is one thing, but staying in business for the long haul is entirely another battle. How many of the Class of 2020’s 4.4 million new businesses will last? While that’s impossible to predict, a few interesting data points from our survey findings shed some light on how new business owners are thinking about the future:

  • Most of the founders surveyed (32.9%) took the leap into entrepreneurship because they were furloughed or laid off during the pandemic and needed a new source of income. That said, workers are now in high demand across all industries, but employees are not rushing back to work for other people’s companies. There’s a growing sense that the pandemic dissolved any trust employees had in the organizations they worked for before 2020, and those who opened their own shops in the meantime would rather make a go of it on their own.
  • New founders are optimistic. Over half of those surveyed (55%) think business conditions for starting a new business are better now than they were pre-Covid.
  • They’ve already got customers! Almost three out of four (73%) of these new businesses report already having customers. And a quarter of them (26%) are still growing off their initial momentum!

Was your small business one that arose from a period of change? Have you noticed new small businesses in your neighborhood? Just as existing small business owners showed us in the early days of the pandemic, entrepreneurs don’t shy away from a challenge. They instead see it as an opportunity waiting to be grasped.

The post Survey Results – COVID-19 Ignited a Small Business Renaissance appeared first on SmartHustle.com.

Source: Smart Hustle

 

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