Small companies don’t often make headlines. These scrappy fighters make up the vast majority of businesses in the U.S. and elsewhere, but it’s the large enterprises that make the front page. This gives people a distorted view of their importance. In truth, small to medium-sized businesses (SMBs) make up the backbone of the economy. Consider that, as of the most recent census, there were 27.9 million small businesses in the U.S. compared to just 18,500 companies that employed 500 people or more. Put another way, 99.9% of all U.S. businesses are SMBs.
These businesses employ just under half of the nation’s workforce, or 120 million people. And while small businesses make up 43% of technology companies, the bulk of the country’s SMBs aren’t tech-related. But an increasing number of these businesses are realizing that if they don’t embrace technology, they may not last much longer.
Over the past decade or so, small businesses have faced a series of challenges. Many are having a difficult time attracting quality workers. Even as large businesses expand their payrolls year after year, employment in small businesses has remained flat.
According to the QuickBooks State of Cash Flow Report, six out of ten small businesses frequently have cashflow difficulties. In 2019, 32% of SMBs had difficulty paying salaries, vendors, and making loan payments. And when small businesses find themselves in trouble, they often find it difficult to get access to affordable financing.
And this was before COVID-19 shut down businesses across the country and prevented millions of workers from doing their jobs. Many companies simply don’t have the reserves required to survive an extended shutdown. The government’s relief package will help, but we’re still likely to see the untimely demise of a large number of smaller companies.
Small companies can’t rely on deep pockets to sustain themselves through rough patches and they don’t have the manpower to out-maneuver larger firms. In order to compete, and to survive, they need to operate leaner, work more efficiently, and leverage every bit of technology available to them.
Teleconferencing software like Zoom and Teams, and collaborative cloud software products are enabling an almost fully remote workforce. Small businesses can use these technologies to hire qualified candidates from anywhere in the world, solving workforce issues.
Inexpensive digital marketing options and the proliferation of social media help SMBs connect with their customers and prospects in unprecedented ways, dramatically shortening sales cycles for those companies that fully utilize the available services.
Data is king and those small businesses that were prescient enough to consistently collect it can now parlay data analysis and machine learning algorithms to find cost savings and uncover missed efficiencies. They can find new markets and out-innovate their competition.
The good news is that it’s not too late. There’s still time for small businesses to adopt digital technologies, move to cloud-based services that eliminate expensive hardware purchases, and begin granularly tracking business data.
The current pandemic will end and with it the fates of many small businesses. But those that remain will have the opportunity to thrive again, and those that embrace technology will almost certainly rise to the top.
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