U.S. Small Business Owners Approach 2021 with Optimism, Anticipate Change
By Marwan Forzley, CEO of Veem
After a year fraught with economic challenges, U.S. small business owners are reflecting on lessons learned from 2020. Despite the hardships they collectively experienced, owners are feeling optimistic about what’s in store for 2021.
Seventy percent of small businesses surveyed by Veem, an online business-to-business payment solution, feel some degree of confidence in the U.S. economy moving into 2021. However, this confidence appears tentative. Of the 1,138 small business owners surveyed, 31% reported that they are “somewhat confident,” while only 11% are “extremely confident” in this year’s economic outlook.
Veem’s Q4 State of Small Business report indicates that, last year, businesses either experienced growth as a result of their adaptations after COVID-19 spread rapidly last spring, or they grappled with revenue shortfalls as supply-chain disruptions, vendor availability, and local measures to curb the spread continued on.
This finding is reminiscent of Veem’s inaugural report, released in Q2 2020, where it saw feedback suggesting COVID-19 created two different worlds for small businesses, one where businesses are performing incredibly well due to being able to pivot—or struggling due to a reliance on a physical exchange of goods or in-person experiences.
The specific challenges business owners faced varied by industry, as some business sectors faced more restrictions than others in their operations or offerings. However, the most important challenges business owners identified included the economy (50%), financial stability and cash flow (41%) and attracting new customers (35%).
In Q4 specifically, business owners were significantly affected by rising COVID-19 cases. Despite the anticipation of the holiday season, more than half of businesses (54%) said the holiday shopping season did not create a revenue boost. Only 10% of respondents said their business received a significant boost during this time.
As the year came to a close, rising COVID-19 cases, increased government restrictions and political tensions were all top of mind for business owners. However, over half of respondents (58%) agreed that resiliency and remaining open to change was the top lesson they learned in 2020, indicating a willingness to embrace adjustments in the new year.
Despite the divided sentiment business owners felt during Q4 2020, the majority of respondents share some level of optimism for the economy in 2021 and beyond. Business owners expect positive trends compared to 2020’s persistent disruptions, although their optimism is more conservative for the first half of this year.
The coronavirus pandemic is still on business owners’ minds. Just over half (55%) of respondents expect a business boost now that the U.S. has begun rolling out COVID-19 vaccines. Still, more than three-quarters of small business owners believe that COVID-19 will continue to impact their business for the next 12-16 months. A sign that owners will look to enabling technology and public sector support to weather the year ahead.
This belief is reflected in the respondents’ ideas surrounding business recovery. Only 55% of respondents expect to recoup last year’s losses in 2021. Most respondents felt as though their sales would not return to pre-pandemic levels until the latter half of 2021 or beyond, and 37% of small business owners expect it will take longer — heading into 2022 (26%) or after 2022 (11%).
Beyond sales, government changes were also top of mind for business owners as the U.S. prepared for a new federal administration in December. Taxes (30%) and government policies and regulations (31%) were the fourth and fifth most important challenges owners reported.
When reflecting on the most pressing needs from the new administration, over half of business owners said they need more small business loans and financial support, followed by eased regulations around COVID-19. Paired with a clearer and more consistent pandemic response from the government, meeting these needs could help businesses across all industries get back on their feet and soldier ahead as they face more — hopefully positive — change.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.