Earlier this month I sat down for a conversation with four top executives from leading companies that together have served millions of small businesses through the Covid pandemic.
As we begin to emerge from what historians will look back on as a time of great challenges and economic upheaval, I wanted to better understand what small businesses have learned from the experience, and what lessons will be applied for the future. Here are the biggest takeaways from the discussion (which I’ve edited for clarity) with René Lacerte, chief executive and co-founder of accounts payable processor Bill.com; Stephen Markwell, who is the head of treasury services product strategy for commercial banking at JP Morgan; Dean Henry the executive vice-president of global business financing and supplier payments at American Express and Rodney Fong; the president & chief executive at the San Francisco Chamber of Commerce.
The biggest 2020 issue wasn’t Covid – it was the uncertainty created by Covid
Rene Lacerte The year you had social unrest, you had the fires, the hurricanes, you had the political environment. All of this uncertainty actually created a challenge for business to know what’s coming and that uncertainty is just hard to react to. And it still is challenging. I think people are moving through it. Businesses have adapted and they’ve come out of the lows of the pandemic. They’re still cautious, but they’re moving forward.
Even with uncertainty, many businesses did better than expected
Dean Henry One of the customers that we have is a guy named Luke Holden. He’s the CEO of Luke’s Lobster. Luke has 30 restaurants in the US and in Japan and he quickly pivoted his business to optimize. He’s selling lobster meat and seafood delicacies to his customer base on social media digitally. I personally credit a lot of the success of small business to taking advantage of the e-commerce and payment flexibility that the entire industry and ecosystem has provided.
Racial equality will be a focus
Stephen Markwell The pandemic has really exacerbated racial inequalities, and especially amongst historically underserved small businesses. I think businesses around the world are thinking about how we change that and how do we drive for equality. We’ve committed billions to help advance racial equality with one of the programs adding 15,000 loans to small businesses that are in the Black and Latinx communities.
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Rodney Fong For those new entrepreneurs that we’re talking about, especially in communities of color that maybe it’s their first venture, I think we have an opportunity to really help them out. We don’t know exactly how that is but we should learn along with them and create that opportunity. And so, at least the Chamber of Commerce, we’re going to try our best to do that, to support those new entrepreneurs. And it’s going to be different.
Work from home is the new required benefit
Gene Marks Working from home is going to be a required employee benefit for all companies, big and small. And I think that small businesses that don’t recognize this and go back to their old ways are going to miss out on hiring good, talented people because, like health insurance and retirement, I think people are going to expect that there’s work from home options.
Technology will create a new renaissance of entrepreneurs
Rodney Fong I do honestly believe there’s going to be another renaissance of entrepreneurs that will take advantage of some of the commercial rents that are now lower. People will take chances because they may not have the same expense burden in opening businesses as they did before. I’m extremely bullish about how San Francisco and other major cities will bounce back. It’s not going to be exactly the same. You may not see the same number of people hustling bustling across the street, but I do believe that quality over quantity is going to be sort of the next mantra.
More startups are coming
Stephen Markwell The barriers to entry have probably never been lower than they are today. It is literally over a thousand times cheaper to start up a business today as compared to 15 years ago. And this is fueled by the front, middle and back office moving to the cloud. It’s fueled by application connectivity and open source and a number of other factors. And it’s a strong funding environment, which we think we’ll see at least through 2022, if not longer. This bodes really well for startups. And I think these small businesses will natively be more adaptable and resilient.
Logistics will create challenges, and opportunities
Stephen Markwell We completed a survey on business leaders’ outlook and one of the questions was around the pivot to e-commerce from a distribution perspective. Two figures that came out was that about 12% of them pivoted to a complete e-commerce sales distribution model and another 14% plan to do so next year.
Rodney Fong Land costs in San Francisco right now are going down. The idea of purchasing a warehouse in San Francisco probably really wasn’t even a thought of a year ago, two years ago. Now it is. This will change the landscape of the wholesale world and the supply chain.
The future looks bright
Rene Lacerte Small businesses are resilient. And I think many have learned that they can adapt and they can move faster than they ever thought they could. Change is here and businesses are resilient and they need to embrace the change and embrace the opportunity that’s coming.