By Kushagra Shrivastava, managing director, Verizon
We recently published findings of the Yahoo Small Business 2021 Microbusiness Outlook Report, a survey that reveals the state of microbusinesses (businesses with five or fewer employees) coming out of the COVID-19 pandemic and their outlook on the future. The survey results explore how the pandemic impacted microbusiness owners differently, from BIPOC microbusiness owners to sole proprietors (microbusiness owners with no employees) and entrepreneurs aged 40 years and over. Here is a snapshot of what we learned from the different types of microbusiness owners we surveyed.
Future growth is on the horizon for BIPOC microbusiness owners
During the pandemic, BIPOC microbusiness owners were more likely than their non-BIPOC peers to seek support from their personal network in order to stay afloat (33 percent, compared to 23 percent for non-BIPOC microbusiness owners). As BIPOC microbusiness owners look ahead, in comparison to the rest of their peers, they are particularly focused on future growth, with 62 percent planning to expand their businesses this year, significantly more than their non-BIPOC peers (50 percent). 78 percent of BIPOC microbusiness owners also report planning to update their business operations to meet changing customer needs post COVID-19 (compared to 68 percent of their non-BIPOC peers).
The vast majority of BIPOC microbusiness owners recognize the vital role that technology will play in driving this growth, with 86 percent saying that technology will be critical for growing and scaling their business (compared to 70 percent of their non-BIPOC peers). This includes ecommerce, with 81 percent of BIPOC microbusiness owners planning to prioritize ecommerce over the next year or two, compared to 73 percent of non-BIPOC microbusiness owners.
Sole proprietors weathered the pandemic without outside support
For sole proprietors, the pandemic has been particularly difficult. Only 25 percent of sole proprietors received or expects to receive pandemic-related government support, much less than the 42 percent of their peers with employees. In addition to minimal government support, these entrepreneurs also faced a lack of community support, with 63 percent of the sole proprietors surveyed reporting that they did not receive any community support to keep their business operating during the pandemic, highlighting the challenges that sole proprietors face in going it alone.
This lack of support has stifled sole proprietors’ prospects for growth, with two-thirds of microbusiness owners with no employees (66 percent) saying they do not plan to expand in the coming year, compared to just 43 percent of their peers with employees. But sole proprietors have also weathered the worst of the pandemic, with 46 percent reporting their business was unaffected by COVID-19 and just 30 percent saying they had considered closing their business as a result of the pandemic.
Without tech adoption, older microbusiness owners may fall behind
The study also highlights the resiliency of older microbusiness owners compared to their younger peers, reflected in how they perceived the threat of closing during COVID-19. While 56 percent of microbusiness owners under 40 considered closing during the pandemic, just 38 percent of those 40 and older did the same. However, the study also reveals that older microbusiness owners are less focused on exploring and adopting new technology that will be critical for them to adapt to changing customer and buying behaviors post-pandemic. Older entrepreneurs risk falling behind their younger peers if they do not put the work in to modernizing their businesses.
Just 73 percent of microbusiness owners aged 40 and older plan to prioritize tech in the coming years, compared to 84 percent of those under 40. Among those who use software platforms to support their business, 76 percent of microbusiness owners under 40 have invested or plan to invest in new platforms to optimize their business compared to just 54 percent of their peers 40 and older who say the same. Older entrepreneurs are particularly behind when it comes to increasing their presence on social media (43 percent, compared to 52 percent of younger microbusiness owners) or using tech to drive new products or service updates (17 percent, compared to 31 percent of their younger peers). This widening gap could make it more difficult for older entrepreneurs to keep up as they emerge from the pandemic, with more microbusiness owners under 40 (65 percent) planning to expand than those 40 and older (39 percent).
Moving forward in 2021
Overall, microbusiness owners’ outlook for 2021 is bright. Despite over half of microbusiness owners continuing to struggle with the economic impacts of COVID, 95 percent of microbusiness owners are optimistic about 2021. Not only that, but over half of those surveyed (52 percent) are even planning to expand their business this year. We are proud to walk alongside small business owners as they enter this next stage and emerge from the COVID-19 pandemic ready for growth.
The findings of the Yahoo Small Business 2021 Microbusiness Outlook Report are based on a survey fielded in May 2021, which yielded responses from 1,000 U.S. business owners with five or fewer employees in the United States.