The COVID-19 pandemic had a significant impact on the small business community—but nevertheless, they persevered. Many small business owners turned their attention to online fronts to keep business running, trying new strategies, and now have different priorities for the coming year.
For some, the pandemic was an opportunity to turn passion projects into a full-time gig and start up a business of their own. In fact, 2020 was a record year for new businesses in the U.S. as Americans started 4.4 million businesses in 2020, a whopping 24% increase from 2019. Despite the economic challenges posed by COVID-19, these small business owners prospered, building the foundational elements of their business, and kick-starting their path to success.
The Bluehost Small Business Outlook Index—which polled more than 1,000 U.S. small business owners with fewer than 100 employees in February 2021—sought to gain more insight into how small business owners adapted to COVID-19 challenges and what the future looks like for both businesses that existed pre-pandemic and those that were established in the past year, Pandemic Born Small Businesses (PBBs).
Keep reading to learn:
- The differences and similarities between Pandemic Born Businesses and Established Businesses
- Why websites remain a top priority and pain point for SMBs
- How prepared SMBs are for reopening
- Sustainability and purpose-driven marketing priorities for SMB owners
- SMBs outlook for the remainder of 2021 and beyond
Pandemic Born Businesses vs. Established Businesses
Some of the best ideas are born during challenging times. With consumer shopping trends continuing to prefer online shopping, it’s no surprise we saw the rise of a new group of entrepreneurs and small businesses. According to our survey, 15% of respondents reported launching their business during the pandemic (between February and October 2020). Launching their businesses between Zoom parties and social distancing, we took a look at how these entrepreneurs approach all aspects of their business compared to Established Businesses — or those started before the pandemic.
Who are the PPBs?
In addition to looking at behaviors, business strategies and tactics, we wanted to know more about the people behind the PPBs.
PPB owners are more likely than Established Business owners to still have a full-time (32%) or part-time job (10%). The majority of PPBs are the sole business owner (78%), female (64%), between the ages of 25-34 (35%), with no children (41%) and are married or in domestic partnership (48%). Roughly 16% of PPB owners have a physical store in addition to their online store and website. PPBs are an extremely optimistic group (41%), and are more likely to be happy or fulfilled than their Established Business counterparts.
Pandemic born businesses differ from Established Businesses in tactics, priorities, and future outlook
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Likely due to the situation in which they were founded, PBBs lean on technology like social media and websites, while Established Businesses rely on existing customer relationships.
PBBs owners took an hands-on approach to website creation, with 60% of owners creating their website entirely on their own. In contrast, 51% of Established Businesses outsourced some or all of their websites.
The difference in business tactics extends beyond website preferences. Our study found that PBBs rely more heavily on social media, with 48% of owners posting on platforms themselves. On the other hand, 71% of Established Businesses state that reaching out and communicating with customers is an important part of running their business. This is likely because Established Businesses have already set up their foundational platforms for communication with customers, such as social media.
Measuring success is critical when running a business; however, what success looks like differs from business to business. When asked how they measure business success, both groups reported financial statements at the top (67%). Beyond that, they differed in their second top-ranking measurement of success with Established Businesses considering employee turnover a second measure of business success (65%) and PBBs reporting website traffic (64%) as a key secondary indicator–a strong indication of PBBs digital-first disposition.
With distinct business management styles, the two groups also held contrasting viewpoints on what they considered the easiest part of the job. PBBs reported managing their social media platforms (24%) and keeping up with trends (20%) as the easiest part of the job. Whereas, established businesses reported the easiest part of running their business as building relationships with customers (46%) and managing customer communications (24%).
Professional and Personal Priorities
Launching a business regardless of economic conditions is a timely venture; however, PBBs reported spending less time on their business. The majority (66%) of Established Business owners reported working more than 30 hours a week while over half (58%) of PBBs reported spending less than 30 hours a week on their business. This could be attributed to the fact that PBB owners are three times more likely to work irregular hours while balancing their small business with a full- or part-time job.
In line with their focus on customer relationships, two-thirds (66%) of Established Businesses cite winning new customers as their primary growth strategy in 2021. While PBBs have their eyes set on expansion with nearly one-third (32%) of respondents reporting plans to develop new products and services in 2021.
PPB and Established Business owners alike are planning to hire in the future, though they differ in priority roles. Surprisingly, given 2021 business priorities, the top roles PBBs owners are hiring for are sales (44%) and customer service (32%), whereas Established Businesses are prioritizing hiring business operations (42%) and customer service (42%) roles.
Outside of business, we discovered that PBB owners and Established Business owners prioritize unique aspects of their personal lives. Established Business owners plan to prioritize their physical health (43%) and financial health (32%) in 2021. Comparatively, PBBs, who hold the added stress of launching a business during uncertain economic times, plan to focus their personal time on work-life balance (37%) and mental health (29%).
Even though the PBB owners launched their business during stay-at-home orders, they are more prepared to open their business to normal-like operations than Established Businesses. Although 27% of PBB have a final reopening plan in place, anthey are unlikely to abandon their digital roots. Nearly half (48%) of PBBs believe an increase in online presence (website, social media, etc.) will be the top positive driver of growth over the next 12 months. Additionally, many PBBs are looking to further expand their digital presence, with 48% planning to launch an online store in the next six months.
Since Established Businesses are more likely to have a physical store (28%), planning for reopening is paramount. This is reflected by the fact that a majority of established small businesses either have a reopening plan in progress or nearly complete (43%) or have a finalized plan in place (23%). The importance of reopening to Established Businesses if further emphasized by the anticipated impact on their bottom line, citing increased demand (49%) and increased productivity (36%) as the top drivers of growth over the next 12 months.
Looking to the future, small business owners across the board are optimistic about their business outlook in a post-COVID world. More PBBs reported some level of optimism (80%) than established small businesses (69%), likely due to the fact that many established small businesses struggled during the height of lockdown, whereas PBBs may feel the best is yet to come since they were founded during a time of crisis.
Entrepreneurial Spirit Remains the Same
Despite significant differences in priorities, business tactics and future outlook, the entrepreneurial spirit remains the same between PBBs and Established Businesses.
Independence is a fire-starter for businesses, with both groups reporting their top reason for launching their business was to be their own boss (68%). Entrepreneurs are fleeing 9-to-5 jobs for the freedom to work for themselves and to do something they are passionate about. To small business owners, their business is more than income or a job–nearly half of both entrepreneurial groups stated their business is their passion (47%).
It’s no secret that launching a business is no easy feat and often a daily grind. Both groups reported working irregular hours, often early mornings or evenings (39%), to successfully manage their business. Entrepreneurs require tenacity and dedication, which is evident as both groups reported feeling optimistic about company growth in 2021 (71%) because they’re confident in themselves and employees (45%).
Websites remain essential but are a pain point for SMBs
When COVID-19 lockdowns triggered a pivot from in-person to online, many small businesses understood the importance of a website and digital presence to maintain business continuity while doing their part to stop the spread of COVID-19. More than a half (53%) of business owners report having a website; of those without a website, nearly 1 in 4 don’t have a website because they don’t know how to build one. In fact, 24% would prefer to go through the complicated process of filing their personal and business taxes than build a website.
Of the respondents with a website, nearly a half (49%) created their website entirely on their own and 1 in 3 felt like they could conquer the world once finished. Websites are invaluable to a business for a multitude of reasons–they act as a 24/7 digital storefront, enable business owners to reach buyers outside their area, have a better understanding of buyer behavior, and offer a wider range of inventory.
However, simply having a website alone doesn’t guarantee visitors or traffic, and many small business owners are missing out on potential customers by not prioritizing optimization and expansion of their online presence. Only 7% of respondents reported updating or making changes to their website as the easiest part of the job. Additionally, very few small business owners incorporate SEO (22%) and Pay-Per-Click advertising (10%) as a part of running their business, making these traffic-focused activities the lowest of all the business tasks. Furthermore, only 22% of SMB owners ranked improving website and customer experience as a top priority for 2021.
Reopening and getting back to business as usual is top-of-mind
As more people become vaccinated, small businesses are preparing to reopen and many eager to get back to business as usual as nearly half (48%) of respondents believe that the vaccine rollout will generate a positive effect on their business in 2021.
Across the U.S., retail, dining, personal care and outdoor recreation businesses can open with varying limitations. Most small businesses are prepared to reopen with 36% of owners reporting they have a final or near-final plan in place; however, this preparedness varies from state to state.
Sustainability and Corporate Social Responsibility (CSR) are key priorities for SMB owners and play into marketing
Now more than ever, consumers are leveraging their purchasing power to support sustainability efforts, and small businesses are doing their part as well. An overwhelming number of respondents (91%), say that their business supports sustainability efforts including conserving energy (49%), recycling (46%) and promoting a paperless office (40%).
In addition to integrating sustainability into their business, small business owners are adopting purpose-driven marketing, meaning promotional campaigns that have the dual purpose of increasing profitability while bettering society. Currently, three in ten (28%) business owners incorporate purpose-driven, and nearly two in five (37%) intend to do so in the future.
When respondents were asked what causes they want to support through their business, the top responses were economics (45%), or improving business operations while participating in sustainable practices, philanthropic (36%), environmental (30%) and human rights (28%). Established Businesses are most interested in incorporating economic purpose-driven marketing (47%) whereas PPBs are most interested in supporting human rights causes (39%).
The coming year brings optimism, growth and self care for business owners
With the vaccine available to all adults by May 1, consumers are eager to return to pre-COVID normalcy and small business owners are ready to welcome more business.
Small businesses are anticipating a surge in sales, with seven in ten respondents feeling optimistic that their company will grow in 2021. Of those feeling optimistic, only 17% attribute it to the economy and 13% to the vaccine rollout. As mentioned, previously, the majority of respondents (45%) attribute their optimism to their confidence in themselves and their employees demonstrating small businesses owners’ resilience and tenacity through challenges.
Despite the year of hardship, many small business owners were successful. In fact, 85% of small business owners surveyed reported some level of success in 2020, with over a quarter (27%) indicating their business was very or extremely successful last year. To continue this success, small businesses have a single business priority in mind – bringing in new customers (65%).
Following this success, help wanted signs are starting to appear in windows across the country, especially in the restaurant industry. Nearly 3 in 10 small business owners plan to hire additional employees in 2021, either by June (14%) or in the second half of 2021 (14%). One in four (25%) said they were not sure yet, while over one-third of respondents (35%) said they had no plans to expand the company. Of those respondents planning to hire, the top three roles included customer service (41%), sales (39%), and operations (39%).
In 2020, small business owners had the chance to re-evaluate their personal priorities and work life balance. Outside the grind, small business owners plan to prioritize:
- Physical health (41%)
- Financial health (32%)
- Better work / life balance (28%)
- Mental health (25%)
- Spending more time with family (23%)
Managing a business, even without a global pandemic, can take a toll on small businesses mental health and stress levels. Small business owners reported using the following methods to reduce stress:
- Exercise including running, yoga, outdoor walks (29%)
- Self-Care (28%)
- Getting enough sleep (24%)
- Spending time with family and friends (23%)
- Making time for hobbies (15%)
Businesses that started during the pandemic and businesses that adapted to “the new normal” to survive share many common experiences. Both had to learn to operate under strict restrictions to ultimately find success; however, as the possibility of reopening businesses looms closer, we see two different views of the future. Both groups share an optimistic outlook, but they have unique plans to achieve success.
As a whole, small businesses have their eyes on the future with a renewed focus on not only business growth, but also prioritizing mental health coming out of the past year. Business may never look exactly the same, but small business owners have proven their resilience and adaptability in the face of numerous challenges.
Whether you’re looking to acquire new customers, launch new product lines or you’re just getting started, Bluehost is here to help. Learn more about reliable web hosting options for your business today.