As part of the #GoToGetsIT series, we interview industry experts to share their perspectives on the data and what it means for business and IT leaders as they prepare for uncertain times.
GoTo recently commissioned a survey of 3,700 business leaders and IT decision-makers to pinpoint how small to medium-sized businesses (SMBs) around the globe feel about current economic conditions.
You don’t need a crystal ball to predict that the global economy may be in for some difficult times ahead. But while the effects of a downturn will likely be broadly felt across the entire economy, the impact on businesses will not be evenly distributed. SMBs face a unique set of challenges compared to enterprise businesses which will inevitably garner most of the headlines.
To understand how SMBs are preparing for the impending economic challenges we spoke with Molly Day, VP of Public Affairs for the National Small Business Association (NSBA), which has been advocating on behalf of small businesses since 1937 and represents more than 65,000 members throughout the U.S. Day leads the NSBA’s outreach on their widely followed economic reporting, and she offered her insights on our survey results.
When the going gets tough, the tough get growing
According to the GoTo survey, 71% of business and IT leaders admit they’re “nervous” about the state of their business, yet Day cautions against focusing solely on survival in the months ahead. “We always encourage members to have a growth mindset, but think fiscally conservative,” she said, noting that businesses should be “cautious and pragmatic with new investments, but also not to shy away from [growth]”.
SMBs should start with the fundamentals, like a solid business plan and setting aside a 6-month operating reserve. But Day also notes that economic downturns can offer a “great opportunity for small businesses to pivot to a different product, create a different service, meet some kind of need that's out there”.
Taking a global approach to growth
As business and IT leaders prepare for economic headwinds, one key focus area (cited by 32% of GoTo’s survey participants) is the diversification of their business's cash flow. Day says that expanding your global footprint is a “great way to diversify your clients and to ensure [that] if the U.S. economy isn’t looking great, you’ve got customers around the world who can help sustain you in difficult times.”
While expanding into new markets was once a daunting prospect for small businesses working with limited resources, attitudes are shifting. Day notes “the pandemic had a huge impact on [that mindset]. We all realized that we can work from home, and there are so many outstanding tools and devices out there that really make it pretty easy for us to do that.”
Day points out that SMBs looking to expand their footprint have many resources at their disposal. “I think there is a really concerted effort to provide those services and really get them in the hands of small business owners. There are trade missions. There are lead generation tools. There's financing available to help you sell overseas. There's export credit insurance. I mean, there are some really great resources out there.”
Relief is out there, but scams are too
One of the keys to surviving the downturn is to keep what you do have safe, according to one in three of the survey respondents. This is critical if you plan to access economic relief during an economic downturn. However, relief programs can be a favorite hunting ground for scammers, Day says.
“There are so many resources out there these days for small businesses, whether it's lending programs or remote work technology solutions. And there really are great solutions,” Day says. “But with that comes a lot of not-great characters out there. Small and mid-size businesses remain a primary target for cybersecurity thefts and unscrupulous actors. So cybersecurity needs to remain a top concern for small businesses.“
Despite challenges, SMBs remain optimistic
\In spite of all the challenges on the horizon, small businesses remain optimistic, with 74% of respondents saying they were confident in their company’s ability to weather a financial storm. Day is not very surprised by these results. “Small business owners, by the nature of who they are … have a high level of confidence in their ability to run that business. And I think they typically have a high level of optimism.”
SMBs may not have a crystal ball to predict what lies ahead; but with the right planning, resources, and a growth-minded approach, they are well-equipped to weather whatever the future has in store.