Small and medium-sized businesses (SMBs) took a beating from the pandemic, and things admittedly looked grim on Main Street in 2020. With COVID now in retreat thanks to mass vaccinations, Main Street SMBs are showing their own form of scrappy resilience in recovery plans.
This PYMNTS Data Brief is an extract of the latest in our Pandenomics® report series, focusing on the strategies, investments and revenue outlook of reconstituting SMBs.
For this new edition, Pandenomics After Vaccines: What Mass Vaccinations Mean for Main Street Merchants, researchers surveyed 530 Main Street SMBs in technology, construction and contracting, retail, manufacturing and professional services about the strategies they used to weather pandemic lockdowns, and where they’re placing future business bets.
Per Pandenomics, 88 percent of Main Street SMB owners affected innovation during pandemic lockdowns. Preferred strategies included investing in touchless experiences — in which about half invested — while 56 percent increased product offerings and 47 percent increased digital transaction support. The bigger they are, the more likely they are to invest, as 94 percent of SMBs with annual revenues of $500,000 to $1 million implemented innovation strategies, compared to 82 percent of those with revenues of less than $500,000, Pandenomics found.
As Main Street SMBs ramp up reopenings, 50 percent plan to invest in new employees, equipment and marketing efforts. “Interest in these investments is particularly high among Main Street SMBs in the technology sector, with 61 percent of these firms saying they are ‘very’ or ‘extremely’ likely to invest in their businesses in the next six months,” per Pandenomics. Manufacturing SMBs (56 percent), professional services (54 percent) and construction and contracting (54 percent) all follow, with retail trade dropping to 37 percent. Just one-quarter of Main Street SMBs say they’re dubious about investing this year.
With optimism now pushing out the bad air, a quarter of SMBs that expanded into other channels say they’ll continue down that transformation path in 2021. That’s largely due to sunnier revenue outlooks from the growing numbers of SMBs that survived.
“Main Street SMBs expect to see revenue growth in 2021, with the professional services and retail segments being the most bullish,” Pandenomics found, adding that 45 percent of Main Streeters see revenues rising this year. “That jumps to 62 percent for professional services providers, 61 percent among retail companies and 56 percent among tech businesses. The manufacturing segment is at the other end of the spectrum, with 16 percent of these firms expecting a decrease in revenue.” About one in five tech SMBs are expecting a drop-off.