5 Small Business Trends In 2021

February 23, 2021
February 19, 2023

Here are 5 small business trends to watch out for this year.

2020 was a long, long year for businesses. The changes and challenges have been enormous; back in February 2020 we could not have foreseen just how enormous these would be. Yet, despite all the chaos and disruption, small businesses have proven to be resilient and adaptable in a year where the landscape altered so fundamentally.

With financial constraints and limitations caused by lockdowns and ongoing social-distancing measures, small businesses have experimented, improvised and pivoted to maintain revenue streams. While there’s light at the end of the tunnel as we enter 2021, the clock can’t be reset to 2019.

While 2020 was a year of challenge and change, 2021 will be a year of continued challenge and evolution as we learn to live with COVID-19. We look at five small business trends for this year.

Digital Is The New Normal

Many small businesses spent 2020 working from home where possible. Technology has been instrumental in facilitating this, with many day-to-day business functions being conducted digitally.

Email is being used more than ever in internal and external business communication. Meanwhile, meetings and conferences have become virtual via tools such as Zoom and Microsoft Teams.

Many operations are racing to move documents, files and servers to external Cloud-based applications to ensure remote access 24/7. There has also been a surge in the adoption of apps for cash-flow and inventory management purposes. With continued restrictions running deep into the year and the likelihood of further virus variants arriving through 2021, technology adoption will remain a key trend.

Digital technology changed the way we worked in 2020. It will continue to be at the forefront of many small business operations in 2021.

Flexible Working

Remote work, where it is feasible, is here to stay, with all the evidence pointing to a permanent shift in working habits. An October 2020 study by the British Council for Offices found that while a majority of workers want a return to the office post-COVID, only 30% want to go back full time. Meanwhile, 46% want a hybrid approach combining remote working with some time in the office.

Many businesses are seeing the benefit of a happier, less stressed and more motivated team. They’ve also got a wider geographical recruitment pool and huge savings in office overheads and expenditure.

Home-working isn’t the whole story either. Through last year (and into 2021), businesses across the UK have been hammered by the lockdowns and other restrictions. They have often been forced into making cost savings in their operations; from reducing hours of operation to hiring contractors and freelancers instead of full time staff.

Millions of employees are working fewer hours, while many have had to take on extra health and safety risks. We are also seeing more pressure on work-life balance than in living memory. Time is having to be taken to ensure family needs like home schooling or caring for sick relatives are met. The traditional thinking behind the working week – 9 to 5 based at the place of business – had started to erode in recent years but the pandemic has turbo-charged the process.

Employees are now more aware of their physical and mental well-being. Many will simply not want to go back to the pre-pandemic norm. With clear benefits for employees and businesses alike, 2021 is likely to see even more organisations offering flexible working. Companies that don’t will have a less-motivated team and will struggle to hire the best talent.

Further E-commerce Expansion

Consumers have been increasingly willing to shop online over the past few years (high-street retail was already under severe pressure pre-pandemic) but COVID-19 led to an unprecedented surge in e-commerce last year. Recent figures reveal that UK online sales grew over 36% year on year in 2020. Countless thousands of small traditional brick & mortar businesses across the UK had to quickly pivot to selling online, to accommodate the changing habits of their consumers.

This small business trend will be reinforced in 2021. What was born out of necessity has become a basic requirement for customers.

A 2020 study by Salesforce found that 68% of customers said COVID-19 had raised their expectations for business’s digital capabilities. There may be a partial move back to brick & mortar sales with people wanting to get out of the house and spend post-COVID. But again, the genie is truly out of the bottle.

Businesses that have yet to pivot to e-commerce at some level will become rarer and rarer through 2021. Increasingly, it will no longer be a nice-to-have option but a must-have.

We’ll Become Even More Localised

With the rise in remote working and millions of people being placed on furlough, the commute as we knew it has collapsed. People are commuting less or not at all. The extra time spent in the local area has had an enormous impact on some small businesses.

A recent report from Nucleus Commercial Finance found that 63% of UK consumers made an extra effort to support local businesses during the crisis. Meanwhile, 70% of respondents planned to spend more with them going forward than in previous years.

People have had to shop locally out of necessity. But, they have found they’ve had a more personalised service (they know your name for a start!) and an often better experience. Meanwhile local companies have put their arm around their community during the pandemic. This includes charity work, using neighbourhood suppliers and partnering with nearby businesses.

The overriding message has been that people need to look after one another where they live. Neighbourhood companies are seeing fostering personal connections with locals give them a key edge over bigger competitors. 2021 will see these small business trends continue and strengthen. It’s not the end of the global village, but life is going to be more local.

Consumer Engagement Online Will Increase

Unsurprisingly, internet usage boomed in 2020. People are spending more time online than ever before, and small businesses are increasingly moving into the digital space. So, while there are more potential eyes on a firm’s online presence, there are also more businesses competing for attention.

Digital marketing will surge this year as small companies battle to leverage online engagement and build digital communities. Becoming active on social media will become increasingly important through 2021 to promote sales, marketing and customer service. Social media is a major source of news and information as well as a place to stay in touch with friends.

With the launch of Facebook Shops, Pinterest Shopping Ads and the like, social media is now a vast e-commerce platform. Increasingly, products will be marketed and bought on “shoppable posts” without leaving the app. Small businesses will increasingly adopt “social commerce” to reach their customers and sell product.

Finally, with the importance of online engagement increasing, expect many companies to build user reviews into their marketing strategy this year. Online customer reviews were already influencing over 93% of online purchasing decisions pre-pandemic. With millions of people feeling a financial pinch due to COVID-19, positive online reviews from customers will help to secure much needed sales.

Read more:

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Small businesses have proven to be resilient and adaptable in a year where the landscape altered so fundamentally.
Rhys Hughes
63% of UK consumers made an extra effort to support local businesses during the crisis
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