Keep an eye on these small business trends and predictions this year
- Lending programs related to COVID-19 will be key, but they are not sufficient. Alternative sources of funding will be needed as well to meet business owners' capital needs in 2021.
- Digital marketing spend is likely to increase, as traditional marketing and PR gets a facelift in 2021.
- Small businesses will drive the adoption of developing technologies, and AR/VR will come into their own as the COVID-19 pandemic continues into 2021.
- This article is for entrepreneurs who want to start the new year off right by capitalizing on trends and predictions that will impact their industry.
With 2020 in the books, small businesses are optimistic that 2021 will be a brighter year. While the COVID-19 pandemic is not yet gone for businesses across the U.S., that optimism is buoyed by the distribution of vaccines. Although the pandemic has been front and center since early last year, there are other trends on the horizon for entrepreneurs to watch as well.
Business News Daily connected with experts in finance, marketing, tech, and human resources to find out what small businesses should expect in 2021 and how to take advantage of these trends.
The Paycheck Protection Program will buoy many small businesses.
The economic impact of the COVID-19 pandemic has depleted many businesses' cash reserves. Although many states reopened after initial shutdowns, some are reimposing restrictions, reigniting concerns around cash flow and the survival of small businesses. The recent $900 billion stimulus bill included additional funding for the Paycheck Protection Program (PPP), which was established last year under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
"Small businesses should try to take advantage of the new stimulus bill, including [applying for] a new PPP [loan]," said Courtney Lawless, venture capitalist and co-host of the Amazon Prime series Wolf PAC.
The PPP loan might be forgivable later, depending on how you use the funds. Read this article to learn more about the new round of funding for the PPP loan program.
Alternative sources of capital will fill unmet funding needs.
For many other business owners, loans might not be an option, especially if they incurred significant financial loss during the COVID-19 pandemic. In those cases, alternative sources of funding, such as alternative lenders or investors, might be critical to attaining much-needed funding for many entrepreneurs.
"Alternative sources of capital will likely also play a pivotal role in keeping businesses solvent," Lawless said. "Alternative sources would include … grants, fintech, venture capital, angel investors, peer-to-peer lending and crowdfunding to name a few. These are important, because many businesses that actually need the capital will not be able to meet the requirements of traditional funding sources due to the negative impact [the COVID-19 pandemic] has had on their balance sheets."
Key takeaway: Government loan programs will be critical to the immediate survival of small businesses, but alternate sources of funding will be key to keeping businesses funded in the long term.
Spend on social media will increase.
The leading social media platforms have billions of users between them, so it is no surprise that social media has been a growing target for marketers. That rapid growth won't stop in 2021. Estimates from insurance firm Finaria suggest that social media ad spend will increase by 15% in 2021, growing the total spent on social media ads to $105 billion. That's nearly double the $54.4 billion total social media ad spend in 2017.
"Year over year, we're seeing spend on social media increase – and this year it was a dramatic increase," said Ari Zoldan, CEO of Quantum Media Group. "Everyone was forced to pull back on traditional brick-and-mortar marketing. They were forced into digital, and many of them see that it is working really well.
"We'll see a thrust forward with digital marketing spend in 2021," Zoldan added.
While social media advertising is increasingly important, it is increasingly competitive. Small businesses should focus on a multichannel organic approach to build an audience and brand awareness. While ads can bolster organic growth, small businesses should avoid getting into a social media arms race with competitors when organic approaches like content marketing could have a better return on investment.
Paid placement advertising will increase in traditional media outlets.
From 2012 through 2019, spending on paid placement advertisements in the U.S. grew from $4.75 billion to $11.44 billion, and that trend is only going to continue in 2021, Zoldan said. Additionally, the line between sponsored content and non-sponsored content is likely to blur, since audiences clearly prefer authenticity to advertisement, he added.
"I think we're going to see a lot more paid placement in traditional media, because it is really hard to get earned media," Zoldan said. "Paid placements are going to be very immersive and very video-centric; it will be hard to tell the difference between paid and earned."
Zoldan added that this could be a risky strategy for many media outlets, possibly jeopardizing their credibility. However, he said, "a lot of companies are walking the line there."
Multimedia spend will generate better ROI than conventional press releases.
In part due to the difficulty of securing earned media, Zoldan said, press releases are becoming less effective. Brands are likely to bring press releases in-house and produce video announcements of newsworthy company developments rather than send text-based releases to media outlets in hopes they will be published.
"Press releases are a thing of the past," Zoldan said. "There is very little value today in putting out press releases."
Where press releases are necessary, they will be most effective when interactive or video-based, Zoldan added.
Key takeaway: Social media is increasingly prominent for marketers in the wake of COVID-19, while conventional public relations will see some changes in 2021.
Augmented reality and virtual reality come into their own.
Augmented reality (AR) and virtual reality (VR) have been in the zeitgeist for some time now, but 2021 might be the year they break new ground in terms of business adoption. Best of all, small businesses could take the lead on the trend.
"Virtual and augmented reality allow us to experience the world in a different way. And especially during a pandemic, it's extremely powerful," said Joe Apfelbaum, founder and CEO of B2B marketing company Ajax Union. "If you want to go to networking events, you can go to VR networking events happening right now. You can create trade show exhibits that are VR and AR experiences in an affordable way."
Small businesses should consider using AR and VR to stand out from the competition and generate excitement among their audience.
AI and big data will drive personalization.
Other technologies businesses can't get away from are artificial intelligence (AI) and data analytics. These two technologies are a match made in heaven that allows businesses to not only collect massive troves of data, but use machine learning to make sense of that data. The insights businesses gain in this way can be used to better target marketing campaigns or find new efficiencies in internal processes.
"You can have a high level of personalization today because of big data," Apfelbaum said. "You can use it to create a custom user experience, because you know what your customers want in a predictable way."
AI can do more than simply contextualize business data, Apfelbaum said.
"For example, this call is being transcribed by AI," Apfelbaum said during an interview with Business News Daily. "If I say 'action item', it will automatically take action items. If I say 'fifty dollars,' it will automatically create a section for money we're mentioning."
Whether small businesses want to leverage machine learning and data analytics for marketing purposes or finding new efficiencies at work, it's more affordable to get started than you might think.
"Depending on what your business is and what you're looking to accomplish, you can leverage AI and automation in a very affordable way," Apfelbaum said. "You can just get one personal business license for a lot of the tools out there."
Small businesses will drive new tech adoption.
A common misconception when it comes to developing tech, Apfelbaum said, is that small businesses feel like it is the realm of big business. However, Apfelbaum suggested the opposite is true.
"If you're a small business and some new tech comes out, you can implement it immediately," he said. "A big company has to test and test, and by the time they test and set everything up, they don't want to change it again because they've invested so much."
That ability to be nimble and adapt to developing technology gives small businesses an edge, and that's why it will be small businesses that drive mass adoption of technologies like AR/VR and machine learning in 2021.
Key takeaway: Developing technologies like AR, VR and AI will start to be adopted by mainstream businesses and consumers. Small businesses will be important in driving this mass adoption.
The world of human resources could be in for some significant changes with the changing of the guard in the White House, said Aaron Holt, a labor and employment attorney at Cozen O'Connor. This could result in policy changes impacting businesses of all sizes.
The federal minimum wage will be increased.
The federal minimum wage hasn't been raised in more than a decade, and a sharp increase was part of the Biden campaign's platform.
"Right now, it's $7.25, and [the] last time [it was] amended was 2009," Holt said. "The Biden administration talked about [a] $15 minimum wage, which would be a substantial increase. Whether they go through with that level of increase remains to be seen, but I would expect some sort of raising of the minimum wage."
Federal paid leave could become law in 2021.
Amid the pandemic, the call for paid family and medical leave has been greater than ever. Recently, with the passage of the Families First Coronavirus Response Act (FFCRA), the federal government extended the Family Medical Leave Act (FMLA) and the unpaid leave it provides. However, that could soon become paid leave, Holt said, especially if Democrats take control of the Senate.
"The other big piece we see coming based upon what has been said in Biden administration is some type of new paid leave laws. Biden was pretty vocal about that throughout the pandemic," Holt said. "I would expect for Biden, especially if Democrats control both houses of Congress, to try and pass some type of codified paid leave at the federal level.
"Whether or not that would apply to all sizes of businesses is still yet to be seen," Holt added.
OSHA will step up pandemic-related enforcement.
Many small businesses might not have heard much from the Occupational Safety and Hazard Administration (OSHA) last year, but that is likely to change in 2021. Holt said small businesses should ensure they have the required safety protocols in place in preparation for increased monitoring.
"During the pandemic, OSHA has been relatively quiet as far as enforcement actions or aggressive investigations, or mandating compliance with pandemic-related safety precautions," Holt said. "I would expect that the Biden admin is going to change that. I would expect to see much more forceful guidance and active enforcement from OSHA, both at federal and state level relative to pandemic restrictions."
How can small businesses ensure they are prepared to pass a compliance check if OSHA steps up monitoring and enforcement?
"The best thing to do is monitor the CDC guidance to what businesses should do to protect themselves, employees and customers," Holt said. "Also, make sure you're checking state and local ordinances. County officials or state officials impose lockdowns or requirements on businesses, and it is incumbent upon employers in that geographic area to comply with those ordinances. If not, there is usually some type of penalty that can be assessed."
Small businesses will need a COVID-19 vaccination policy.
As the COVID-19 vaccine becomes more widely available, businesses will need a policy on how to address vaccination requirements. Entrepreneurs should begin crafting a policy now, Holt said. Consult with an attorney to ensure all local, state and federal regulations are followed when developing your policy.
"Once the vaccine becomes more generally available, employers are going to be faced with [the] decision as to how they deal with that in [the] workplace. Are they going to require it? Recommend it? Incentivize employees to get it?" Holt said. "Getting those policies and practices drafted and tweaked, and making sure they match operational needs of the business now is going to be important, especially for SMBs that won't have an HR department."
Key takeaway: The change in presidential administrations will come with changes in minimum wage and paid-leave regulations. Small businesses should also be wary of stepped-up COVID-19 regulation enforcement and consider developing a COVID-19 vaccination policy.