2022 was a year that many business leaders are eager to move on from. Companies such as Meta, Tesla, and Amazon saw huge drops in their valuations, with hundreds of billions of dollars in market cap lost. These companies can dominate our perception of how well businesses in general are doing, but they aren’t always reflective of the wider trends.
It’s easy to forget that the vast majority of businesses are SMBs, and often enough, the manner in which market forces affect them can be unrelated to the headlines about large enterprises. Recently, vcita, an all-in-one small business management app company, surveyed 302 SMBs as part of an annual report on the state of small business resilience. The questions relate to how much impact technology has on their business, and what trends they are seeing.
The results may surprise you.
SMBs Remain Resilient
Approximately 81% of survey participants believe they are well-positioned to weather an economic crisis. With the doom and gloom in big tech and blockchain dominating the headlines, this is a surprisingly positive outlook.
For context, this is down by 10% compared to last year’s visit survey, where 91% of participants believed they could survive a crisis. However, the drop seems relatively mild when we consider the events of 2022, including the start of the Ukraine War and rising costs of living.
It may be the case that companies that were rocked by the pandemic either failed or were forced to improve their systems to make them more resilient in the future. These systems could be behind the strength of sentiment displayed in the survey.
The confidence level means some companies may even be too conservative in their forecasts for 2023, especially if they supply SMBs. If companies reduce their capacity too far, this opens the door for competitors to take advantage of the higher-than-expected demand.
The survey shows the ambition of some firms, as 52% said their top priority was gaining new clients in 2023, representing a growth mentality. If SMBs were more concerned about survival, you might expect cutting costs or retaining existing clients to be a greater priority.
Digital Payment Adoption Inevitably Increases
Less surprising is the increase in SMBs adopting new technologies for payments this year.
SMBs must keep up with consumer trends. Digital payments are becoming the new normal for consumers and a McKinsey report found that 89% of consumers are using them. A crucial nuance is the majority (62%) now use more than one provider, which shows how agile consumer thinking about payments has become.
According to the city’s survey, nearly 75% of SMBs adopted one or more new technologies in 2022, as opposed to 71% in 2021. While the increase may seem small, it means only a quarter of SMBs didn’t upgrade their digital payments.
As options such as Klarna, Venmo, Stripe, and Paypal gain popularity, the expectation soon will be for all SMBs to have a suite of digital payment options to avoid being left behind. In the coming years, if the cryptocurrency revolution eventually happens, this will trigger another wave of innovation for SMB payments.
Change Is The Only Constant
During the pandemic, the narrative we often heard has been that businesses were forced to make significant changes to their business models to survive. This is understandable, with the shifting environment in terms of restrictions. However, in 2021, only 35% claimed they made significant changes, compared to 95% in 2022.
This could signal a mentality shift amongst SMBs to be far more agile and open to change. Technology is disrupting workflows at a faster rate than ever before with huge amounts of innovation. About 57% of SMBs have adopted new tools to support their daily business operations.
They may be realizing that to keep competing, they must adopt the best tools available to them. The finances of SMBs reflect this sentiment too, as 30% of participants spent more on digital tools than last year and over 50% believe they will spend even more in 2023. When 40% of SMBs already spend more than $1000 a year on their tools, this is good news for the software economy.
On the other side, 65% have made changes to the type of service they offer. This is a trend also seen at large enterprises, with Netflix’s move to offer an ad-supported tier serving as a prominent example. This shows a high level of innovative strategic thinking amongst SMBs.
Evolving Relationships With Social Media
In this year’s survey, there was a remarkable change in how SMBs perceived different social media platforms. Participants were asked what their most important social channels were.
The performance of Tiktok was particularly eye-opening, as it fell from fourth place to out of the conversation. In popular discourse, TikTok has received a great deal of attention because of the speed of growth of some of the platform’s creators. It appears SMBs have found the platform harder work – or maybe they’re alarmed by the government’s potential move to regulate it.
LinkedIn was the major climber, taking the third spot from Twitter. Logically, it makes sense as LinkedIn’s audience of 875 million is significantly larger than Twitter’s, whereas the later platform has also been receiving bad press of late.
Interestingly, every social platform scored lower than last year. Even though Facebook took the top spot in both years, its selection among small businesses dropped from 66.4% to 55.9%. Instagram fared even worse, with a fall from 62.1% to 42.1%.
Summary
Ultimately, vcita’s end-of-year survey revealed some interesting results about the state of SMBs at the end of 2022.
The key highlights were:
- Resilience remains strong despite a turbulent 2022, with 81% of SMBs believing they could survive an economic crisis.
- Digital payments continue their march to universal adoption, as 75% of SMBs adopted at least one solution in the past year.
- SMBs understand the need to be agile and adapt, with 95% having made significant changes to their operations in 2022.
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