2020 has been a tough year for small businesses. Many have felt the impact of the coronavirus—it’s hit some harder than others. During a time when so many are struggling, it may seem counterintuitive to open a new business. But many aspiring business owners are doing just that. A recent QuickBooks survey of 635 people who plan to open a business within the next 12 months reveals why.
The majority of these aspiring entrepreneurs (85%) say the coronavirus influenced their decision to start a business this year, at least in part. Some were among the millions of Americans left jobless this summer, searching for another source of income. Others saw a prime opportunity to sell new products or services to new markets. But the plurality of new business owners (42%) is finally making their side gig “official.”
In 2019, 28% of American workers (44 million in total) reported being self-employed, at least to some extent, according to Gallup research. In other words, they have side gigs. These workers with side gigs reported more challenges with job security and health benefits than those under traditional employment. At the same time, these workers said they were more satisfied with their sense of purpose and power over their schedules.
Self-employed workers with just one job tended to rate their overall work situation higher than those employed traditionally. If that’s the case, making a side gig your main gig could be the right move—even if a pandemic forced you into it.
And there’s more good news. Nearly 70% believe that businesses born in a recession are more resilient. They’re optimistic about the road ahead for new small businesses. And more than half (58%) see more opportunities for their businesses in a post-pandemic world.
New business owners turn to software to fill skills gaps
New business owners are following their dreams and taking a leap. But they’ll be the first to admit they’re not totally knowledgeable when it comes to starting (or running) a business. Especially those who fell into entrepreneurship when their side gig unexpectedly turned full-time.
Only 37% of prospective business owners feel they have the financial knowledge needed to manage a business. Only 36% feel skilled with things like delegation and marketing. These new business owners feel most confident about sales, negotiation, and business planning. But even so, only 40% feel they have strong skills in these areas.
Knowing this, many prospective business owners plan to use software to help them manage their financial processes. Three in 5 intend to invest in financial software to help them with expense tracking, payments, and payroll. Only 1 in 4 says they’ll be doing these tasks manually.
Investing in financial software is exactly what seasoned business owners recommend to new businesses. 58% of current business owners recommend investing in an expense tracking software. Another 50% recommend using financial software to manage things like payroll, invoicing, and payments.
Managing expenses and setting up financial systems, including payment systems, accounting, and payroll, are among the top priorities for new business owners. Other priorities include setting prices, getting funding, and tax compliance.
How new businesses plan to thrive in a post-pandemic world
Starting a new business looks a lot different in a post-pandemic world. Small businesses are selling more products and services online this year, and experts predict that this abrupt shift to e-commerce may be permanent. Consumers who are willing to shop in person will be warier of their surroundings. And business owners will have to take additional precautions to keep their employees and customers safe.
More employees are working from home, and many businesses plan to keep it that way. More than half of new business owners say they plan to hire between one and 10 employees within the next 12 months. 23% of them say they will employ a 100% remote workforce. The majority (75%) say at least some portion of their team will work remotely.
Building an online business and managing remote teams isn’t easy, but new business owners are ready to take on the challenge. 63% say their top priority is finding customers. For many, that means investing in digital marketing tactics and meeting new customers where they live, so to speak. Another 58% say building a business website is at the top of their list. Other priorities include finding suppliers, investing in the right technology, and complying with new regulations.
If you’re among the many people hoping to start a new business this year, here are five tips to help you thrive:
1. Embrace the virtual reality
87% of small businesses that will open within the next 12 months will be online (or a combination of online and offline). Building a website and setting your business up for online sales is critical to your success. Invest in digital marketing, build a social media presence, and think about how you can serve your customers in a primarily virtual environment.
2. Go remote
If you plan on hiring employees or contractors this year, consider hiring remote positions. 28% of current business owners say recent changes (like working remotely) have positively impacted productivity. Another 38% say productivity hasn’t changed. If remote work isn’t an option for your business, think about ways to minimize face-to-face contact between employees and customers.
3. Invest in technology
You’re starting a business to follow your dreams, not to manage expenses and run payroll. 14% of current business owners wish they had invested in expense tracking and other financial software sooner. Invest in smart technology that will allow you to do what you do best from the start.
4. Have a backup plan
Thousands of businesses discovered the importance of having a backup plan at the start of the pandemic. Unfortunately, many realized it too late. 76% of new business owners say they intend to have a contingency plan for their business. Come up with a few worst-case scenarios—natural disasters, cash flow problems, and even supply chain disruptions—and consider how you might overcome them. It’s impossible to predict the future, but a plan can help you prepare.
5. Focus on safety
Beyond tax and legal regulations, small businesses now face additional safety regulations as well. Customers and employees alike want to know you’re doing everything you can to keep them safe—even after coronavirus restrictions have lifted. After all, 32% of current business owners say they’re already investing in more visible health and safety protocols.
Sample and methodology
QuickBooks commissioned Qualtrics to distribute a 22-question online survey to 635 future small business owners. The respondents do not currently own a business but intend to start one within the next 12 months. All respondents were aged 18 to 65 and older, with an average age of 37.
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