In 2020, a record-breaking 4.4 million small businesses launched in the United States—an increase of 24 percent over the previous year, and the largest uptick on record. Now there’s just one question for all these new small-business owners.
What’s next?
For entrepreneurs, the greatest challenge isn’t getting off the ground—it’s remaining in flight. According to data from the Bureau of Labor Statistics, 70 percent of small businesses (often defined as having fewer than 250 employees) fail within the first ten years. To succeed, owners must innovate to stand out, connect with customers, and expand. Here are the top five small-business trends for staying on top.
1. E-Commerce Is Everything
During the past year, online shopping boomed—a trend helping small businesses thrive. In 2020, according to the research firm eMarketer, e-commerce grew by an estimated 33 percent. In addition, small retailers saw an average increase of 104 percent during the holiday season. What does this mean? E-commerce is key to small-business success, now and into the future. So ensure that your online shopping platform is mobile forward, offers product recommendations to personalize the experience, and utilizes one or more social-media platforms as part of its advertising strategy, since 54 percent of people in the United States between 18 and 34 who use the internet have made a purchase through social media.
2. Small-Business Insurance Is Key
You spent the time building your business—now let someone else work around-the-clock to keep it safe. State Farm has almost 20,000 agents who are small-business owners themselves, so they know how to help protect what you created. From commercial auto insurance to liability to worker’s compensation, State Farm offers personal consultations, customizable insurance plans, and exceptional service for over 300 small-business types, such as consultants, electricians, florists and more. See why Investopedia recently voted State Farm the “best overall” insurance company for small businesses today.
3. Remote Work and AI Equals Innovation
Working, meeting, and shopping remotely are here to stay—and that’s a good thing for small businesses. Pivoting from permanent brick-and-mortar stores to pop-up spaces and an expanded online footprint, entrepreneurs can save on overhead and put more toward creative endeavors like growing the business. Paired with AI-powered automated services for back-end functions, which free up time spent on mundane repetitive tasks, business owners can focus on new ways to market creatively on social media. They can also build communities around values, as 51 percent of Gen Z want confirmation that a brand’s commitments align with their own before making a purchase.
4. Cashless Payments Will Continue to Thrive
Since the pandemic, digital payments have grown dramatically. According to studies by Mastercard, 91 percent of consumers use tap-and-go payments, and 75 percent say they’ll continue to choose contactless payment after the pandemic ends. According to Visa, 47 percent of consumers say they won’t shop at a store that doesn’t offer a contactless method of payment. COVID-19 is the main reason for the sudden shift, as the pandemic increased consumer concerns about cash usage. But the reason it’s sticking around is the convenience, speed, and security that digital payments offer. And it’s not just credit cards. Cashless apps and digital wallets are increasingly popular. Go to a farmer’s market today and you’re as likely to see a bar code to a Venmo link as a cash-only sign. Customers not only anticipate a cashless experience with small businesses, they increasingly expect it.
5. Purpose Has Gone Mainstream
Environmental, social, and governance principles have been around for decades, especially in the corporate world, where large companies release annual reports tracking sustainability metrics. This type of reporting isn’t possible for many small businesses, yet more and more consumers purchase exclusively from brands that align with their values, so entrepreneurs need to take note. In a Deloitte survey, 42 percent of consumers said they have begun or deepened a business relationship because they perceive that a company’s products or services have a positive social or environmental impact. Thirty-seven percent of millennials said they have curtailed a business relationship because of a company’s unethical behavior. In today’s world of consumer activism, social and environmental responsibility need to be key components for authentic engagement. In short, purpose produces profit, especially for small businesses, and it’s more important than ever.
This story was produced by WIRED Brand Lab for State Farm.
