Some entrepreneurs are looking to small business innovation to stem the negative impacts of COVID-19 on the sector.
In the new What’s next for the small business economy? report, Intuit QuickBooks surveyed 965 small business owners to gauge both the state of small business and what’s in its future.
It finds some changes that are expected, like 34% of businesses cutting costs or 28% relying more on e-commerce. Many are also investing in virtual services (20%) and virtual technology (19%). Some 17% also looked to online payments.
However, the new QuickBooks study also shows that 22% of respondents have new products and services, almost all because (95%) of the coronavirus. Other findings also show that the coronavirus may be fueling small business innovation, including the start of new businesses.
Fueling small business innovation
The economy is in a precarious state because of the pandemic. However, some companies are looking to innovation as the answer to the uncertainty.
To be clear, most businesses say that the current state of the economy has no impact (38%), a negative impact (26%), or a very negative impact (8%) on the rate of innovation in their company.
However, 19% say the situation has a positive impact, while 10% say it has a very positive impact, on small business innovation rates.
The positive impact of small business innovation for those that do innovate is also apparent. Some 19% say the revenue added by innovation is 10% to 24%, while another 20% say the boost is 25% to 49%.
An even higher 25% say that the revenue boost from small business innovation is 50% to 74%, while 19% report an even higher boost of 75% to up to 100%. Some 7% say the revenue increase is more than 100%.
New business opportunities
For those that started a new business, small business innovation is critical. A significant portion identified new business opportunities.
The leading reason for starting a new business is needing a new source of income, say 35% of those who did. However, 28% say the coronavirus accelerated their plans.
More telling, are the 22% who say they got an idea for a new product or service because of the pandemic, or that they saw an opportunity to sell a product or service more competitively.
Another 21% say they started a new business because they saw an opportunity to sell a product or service to a new market. Meanwhile, 14% say they decided on a new venture to fill a gap left by another business that recently closed.
Starting a new business during a pandemic
Entrepreneurs are also starting new businesses both despite and because of the coronavirus.
The coronavirus has little to no influence on 42% of the respondents’ decision to start a new business. On the other hand, 26% say their decision to do the same is slightly to significantly influenced by the pandemic.
QuickBooks finds that businesses are changing what they sell and where they sell these through. Some 28% of respondents say they sell more products or services online now.
Beyond that, however, 22% developed new products and services. Furthermore, 14% adopted an altogether different business model. Of those who are implementing new business models, 76% say the pandemic “somewhat” to “highly influenced” the change.
Future business owners
The survey also shares insight from 635 future small business owners.
Most (42%) will start a business to make a side gig official. Meanwhile, 24% say they’re pursuing their dream after finishing their education. Another 11% say they lost their job and are going at it alone, while 9% say they left their job to go at it alone.
These businesses are the majority combination of both online and offline storefronts (50%), followed by online-only (37%). Only 13% will be offline-only.
Most will be in the accommodation and food services, as well as arts, entertainment, and recreation space (both at 13%). This is followed by retail (12%), educational services (8%), construction (7%) and information (6%) industries.
Most future small business owners are also optimistic, with 58% saying they see more opportunity during this time. Tied at 18% see less opportunity, or were neutral.
Some 24% are very optimistic about the prospects for small businesses over the next year. Furthermore, 48% say they were optimistic, while 21% are neutral. Most importantly, just 7% are pessimistic, and only 1% are very pessimistic.