A Federal Reserve report says we may not know the true extent of COVID-19 on small businesses in the United States until long after the pandemic is over. The Fed says no statistics are available on the number of companies forced to permanently shutter their operations.
However, the U.S. Census Bureau reports that despite the terrible human and economic toll the virus exacted, more than 4 million new businesses were formed in 2020. That represents a 24% increase in business starts from 2019.
Four ways businesses adapted during the pandemic
Creativity, grit and patience were vital qualities during the past year and a half. While not all businesses were able to survive on those features alone, many were able to adapt. As a result, experts believe these innovations will have long-lasting effects:
- Creative business models: Companies required to close their doors were forced to find new ways to reach their customers. Many were able to implement new features, such as e-commerce options and curbside pickup. These hybrid models are likely to continue.
- Digital tools: A Salesforce report says the pandemic encouraged small businesses to increase investments in technology finding new ways to connect with customers. Who heard of Zoom before the pandemic? Not many. Companies had to prioritize using technology to meet their clients’ needs, where before, it was a secondary approach.
- Community connections: Small businesses are a vital part of the communities they serve, and many stepped forward to help those struggling with basic needs during the pandemic. Many small businesses were there when needed the most, whether it was contributing to food banks or distributing hand sanitizer.
- New business growth: Not all startups in 2020 were formed due to entrepreneurial spirit. Many were created by talented people who, laid off from their long-term jobs, wanted to continue in their industries and saw an opportunity. Many of these small businesses banded together by outsourcing back-office work that owners traditionally did themselves.
Innovation will help businesses heal
While many small and large companies face a long road to recovery as we come to the end of the pandemic, these innovations and others will likely speed the process.
National Association for the Self-Employed President and CEO Keith Hall told The Associated Press that businesses that learned and adapted during this time will likely become much stronger as a result.