Last reviewed 16 December 2020

The trials of 2020, thanks to Covid-19, have changed the business landscape. What will 2021 look like for the small business community?

As small business owners look forward to 2021, thoughts turn to how the pandemic has impacted their enterprises, the markets they trade within, and the relationships they have with their customers and commercial partners.

The future of small enterprise is coming into focus. As you read this, Brexit is still on-going and will have a profound impact on how some small businesses trade in 2021. The shadow of Covid-19 could be extended and persistent in some sectors.

However, there is optimism: According to a survey of 1,000 small business carried out by Yell, 76% of the SMEs surveyed began offering a new service as consumer needs shifted as a result of Covid-19. Businesses on average, agreeing that these additional services were crucial in helping their company survive the pandemic. And nearly two-thirds (61%) of business owners state they are optimistic about 2021.

Regions where SME owners are the most optimistic for 2021:

  • East of England – 89%

  • Greater London – 76%

  • Northern Ireland – 74%

  • Scotland – 74%

  • South East – 70%

  • West Midlands – 70%

Yell CEO Claire Miles commented: "Our research highlights not only the sheer adaptability of businesses but also their ability to find the right way to communicate change to their existing and potential customers. It's clear that during these uncertain times, instant messaging services have been a real lifeline to businesses in the sector who have had to adapt and adjust their models quickly. Instant messaging, as we are aware from our own developments with Apple in this area, facilitates timely and conversational communication between businesses and consumers and as the findings show, many businesses will still be relying on these services to succeed post pandemic."

Speaking to Croner-i, Ellen Cole, Marketing, PR and Social Media Director at Little Seed Group says: "Many businesses, especially those who are deemed as offering essential services would have seen sales increase at an abnormal rate during 2020. This, for many, however, is not sustainable long-term so, businesses need to find ways to build and nurture these new customer relationships sooner rather than later so that customers do not return to the big mainstream brands to fulfil their needs. Digital marketing is ideal for nurturing relationships, especially, email marketing where businesses can look into the psychology of their audiences and segment and set up automation in a way so that they produce and distribute the right content to the right audiences.

Ellen concluded: "What the pandemic has taught small businesses is that you no longer can put all of your eggs in one basket. Small businesses need to embrace and become more confident in digital communications and find new and innovative ways to generate several streams of income. By doing this, it will ensure long-term stability and will provide several routes to market to reduce future risk."

Diversification, agile working practices and an understanding of how customers and their relationship to businesses have changed will be fundamental to the success of the small enterprise in 2021.

Neo business

Croner-i spoke with Caroline Gowing, Co-founder, Pink Spaghetti, a virtual assistant franchise, and began by asking looking forward to 2021, what are the main challenges small business owners will face?

"Everyone is currently struggling with a high level of uncertainty, in every aspect of our lives," Caroline responded. "And for small business owners, this can make any form of business planning a real challenge. For many, the lack of control can lead to heightened levels of stress.

"We don't yet know whether habits created in 2020, such as much higher level of homeworking, will be long lasting, or if things will revert to how they were once the pandemic is under control. Small businesses may have invested heavily in technology to enable working from home, to find that employees miss the office and want to return once it is safe.

"Small business owners will need to continually keep on top of changing legislation, relating both to COVID and to Brexit. This is time-consuming and can lead to a sense of frustration over continuously moving the goalposts. The additional research and reading can take SME owners' eye away from other aspects of the business.

"A positive challenge for SMEs could be that there are going to be potential peaks due to 2020 being in effect cancelled. But SME owners need to work out how they are going to resource these busy periods, whilst being able to revert back to what will probably be more normal levels in 2022."

Will the relationships small businesses have with their customers change in 2021?

"I think many businesses will start the new year with much closer, more personal relationships with their customers. After all, you have all been through it together.

"Customers have seen the importance of supporting small businesses, whether that be their local grocer, printer or PA company. The increased levels of communication that have had to take place between SMEs and their customers - advising of openings and closings, changes in business hours or in ways of working - have led to customers feeling that they know businesses better. The challenge for SMEs is to continue to nurture these connections."

Do you think the agility small businesses have will be a commercial benefit throughout 2021?

"Small businesses' agility is a definite commercial benefit when it comes to successfully navigating 2021. Business owners have learned what they are capable of, in terms of having to pivot dramatically and quickly, and this has been excellent for personal development. Some have pulled leadership skills out of the bag that they didn't realise they possessed, whilst others have developed new income streams that will see them become more profitable in 2021 and beyond.

"And small businesses have an inherent advantage in that change is unhindered by the bureaucracy, processes and politics of larger organisations. Small businesses that pivoted, diversified, adapted and effectively communicated will reap the rewards in 2021."

How will the small business sector generally change in 2021?

"The small businesses that have survived will benefit from deeper and more personal relationships with their customers and a much greater degree of customer loyalty than they knew before. Their challenge is to continue to nurture these deeper relationships and to extend the adaptability they have discovered beyond the pandemic."

Will there still be an appetite to start new small enterprises in 2021?

"The new year will inevitably bring redundancies, but with redundancy comes the potential for a whole new start. People have seen the benefits that come with working from home in a more flexible manner and this new insight may start an avalanche of home-based businesses. Our company, Pink Spaghetti, is a virtual assistant franchise. We have signed up several new franchisees over the second half of this year because they realised, whilst on furlough or working from home, that they wanted to work more flexibly and to say goodbye to the commute."

Pivoting to offer new products or services at short notice has always been a trait of the small business. The pandemic has shown how innovation and the adoption of new tools can at least place a small business in a position where it can survive. Next year, though, will be a test of these measures. Customer touchpoints have changed. How companies operate will look very different. The small business community is ready to support these changes.