We’re turning the corner in 2021 – the year after the global pandemic changed everything. 2021 was greeted with relief and hope by struggling businesses that looked to clean the slate and thrive after having to survive 2020.
How has your 2021 been so far? According to a mid-year World Economic Situation and Prospects (WESP) report, after contracting by 3.6% in 2020, the global economy is expected to grow by 5.4% in 2021.
A big factor that has contributed to the growth of the global economy is the availability of vaccines. According to Reuters, all 195 countries have started their respective vaccination programs.
In the United States, a country of 332 million people, more than 288 million doses have been administered representing 69% of the population.
Still, we believe that the coronavirus will continue to play a significant factor in the growth of the economy in 2021 and beyond. Always keep in mind that vaccines are developed for the virus they were designed for.
2019-nCoV has mutated into different variants the latest being the Indian variant which is reportedly the most transmissible mutation. The current line of vaccines are being tested for their effectiveness against the Indian variant.
And the reality is – the virus will continue to mutate.
While it’s certainly great news that the global economy is recovering, we shouldn’t let our guard down even if we are vaccinated. We’re confident that the economies of the world will continue to grow but the engines driving them forward run through the Internet.
Here’s a list of the small business trends we see developing in 2021 and continuing in 2022.
1. E-Commerce Will Continue to Grow
The e-commerce industry proved to be immune to the global pandemic. According to a report published by the United Nations Trade and Development (UNCTAD), the e-commerce industry generated US$26.7 trillion in sales in 2020.
The sales figure represented a 19% increase from 2019 numbers and was clearly fuelled by the pandemic as lockdowns were implemented worldwide.
We believe the e-commerce trend will continue to grow in 2021 and beyond. Yes, the threat of the virus remains but more consumers appear to have developed a greater appreciation for the ease and convenience of online shopping.
Not only will online shopping keep them protected from the virus but consumers don’t have to deal with the inconvenience of traffic and looking for open parking spaces.
It will cost less to shop online because you save up on gas/transportation expenses, parking tickets, and other incidental expenses that you typically incur when you’re at a commercial center.
For business owners, managing online retail will be more affordable than running a brick-and-mortar store. They can rent a smaller commercial space and keep their manpower complement lean.
2. Business Strategies Will Prioritize Profitability Over Expansion
While the global economy is growing, we tend to view it more as a recovery phase. Many businesses are still trying to recoup their losses from revenue declines and accumulated expenses.
Business owners will be more cautious about defining their goals for 2021 and take more conservative approaches to manage their finances.
This means expansion plans that were set into motion pre-pandemic will most likely be shelved for the time being.
Instead, business owners would prefer to focus on strategies that will keep them profitable by maintaining positive cash flow.
They might implement strategies that could streamline costs while improving productivity such as integrating automated technology, digitizing processes, and outsourcing.
3. Availability of Pandemic-related Financing Programs
The pandemic was unprecedented in that it necessitated the shutdown of the global economy. Not even the world’s most powerful economies were spared. The first step to recovery would be to open the world for business.
Considering the losses incurred by businesses, the majority of which would be categorized as small and medium-sized, governments need to step up and provide much-needed financial assistance to help the enterprises get back on their feet.
A good example would be the Paycheck Protection Program (PPP) a business-stimulus package that falls under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
The PPP is a type of loan that incentivizes business owners to keep their employees on the payroll. The features of the PPP are as follows:
- Available to all small businesses.
- Low-interest rate of only 1%.
- A maturity period of 2 years and 5 years for those issued after June 5, 2020.
- No collateral required.
- No personal guarantees needed.
- No fees charged on the loan.
- Loan payments can start 10 months after the expiration of the 24-week loan coverage period.
Across the ocean, Singapore has introduced 7 types of small business-friendly loans including the Temporary Bridging Loan Program (TBLP), which is backed by the Singaporean government and by 19 participating financial institutions.
The TBLP is the government’s Circuit Breaker measure that was designed to help jump-start small and medium-sized businesses in Singapore that were affected by the pandemic.
Governments are encouraging their entrepreneurs to avail of the stimulus packages and take part in rebuilding the economy of their respective countries.
4. More Telecommuters in the Workplace
Even with the increased number of vaccinations, many businesses are not operating in full capacity.
There are companies that continue to maintain a workforce of only 30% at their physical location and 70% working at home through a telecommuting arrangement.
We believe more businesses will integrate more telecommuters in the workplace but not just for health and safety concerns.
Telecommuting has the following benefits for businesses:
- Reduces Costs – Businesses can opt for smaller office spaces, reduced Internet bandwidth, and lower overhead expenses.
- Increases Productivity – Telecommuters don’t have to worry about the inconvenience of the daily commute. They can work right after having their first cup of coffee.
- Lowers Attrition Rate – Employees who work from home are generally happier because they experience better work-life balance.
The growth of telecommuting is nothing new. A 2014 article by Fast Company projected that 50% of the global workforces will be composed of telecommuters in 2020.
The pandemic merely accelerated the inevitability of having telecommuters in the workplace.
5. The Freelance Economy Will Boom
As part of their effort to streamline overhead costs, more businesses will opt to outsource work to freelancers.
Freelancers are skilled individuals who provide services to businesses from remote locations. Many freelancers came from the 9-to-5 grind and have the necessary experience to manage a project expertly.
Businesses can greatly reduce their payroll costs by hiring freelancers for the following reasons:
- You pay only for total productive hours rendered.
- You have the option to pay per completed project.
- No need to pay government-mandated benefits as freelancers are generally contracted, not employed.
In comparison, the cost of hiring a Full-Time Employee is equivalent to paying 1.4-times his/her salary.
Businesses can also opt to hire virtual assistants who are adept at managing administrative functions such as phone handling, calendar management, appointment setting, email filtering, social media management, and managing/organizing documents.
Virtual assistants are not limited to providing administrative assistant services. You can find many VA’s who are proficient in highly technical skills such as graphic design, legal transcription, and market research.
Conclusion
In part 2 of this article, we will discuss the remaining 5 small business trends that will continue to define the business landscape in 2021 and beyond.
Stay tuned for that one!
The bottom line is that while it’s fine to be fearful of the virus, you shouldn’t let it stop you from pursuing your business goals or dreams of becoming an entrepreneur.
There’s a popular quote that says opportunity and chaos are on the opposite sides of the same coin. The pandemic might have changed the way we do business but make no mistake about it – there will always be opportunities!
Do you have other ideas for business trends in 2021? Please let us know in the comments section.
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