Round table summary: How SMB facing tech startups are seeing 2020 as an opportunity

This week, DataSeries, an OpenOcean led initiative hosted another Virtual Roundtable together with Jennifer Schenker about “How SMB facing tech startups are seeing 2020 as an opportunity”.

The following article was published via The Innovator and below you can find the summary.

INSIGHTS GATHERED:

CHALLENGES:

Small and medium-sized enterprises have been the lifeblood of the European economy, accounting for more than two-thirds of the workforce and more than half of the economic value added. The effect of the COVID-19 crisis on SME performance is immense and a recent McKinsey report based on a survey in the UK shows that 80 % of SMEs say their revenues are declining. They also report several related effects: concern about defaulting on loads (1/4); concern about their ability to retain employees (24 %) and doubt in their ability to sustain their supply chains (28 %); expectations of reducing headcount in the aftermath of the pandemic (28 %) and postponing growth projects (36 %). Due to the pandemic, one fifth of businesses now expect to default on loans and lay off staff. If revenues were to remain steady, 55% of SMEs could shut down by September 2021, a figure that rises to 77% if revenues worsen

We all see and/or experience the challenges this year has presented and in the light of this, we wanted to have a discussion around the opportunities for SMB facing tech startups.

Opportunities:

A record number of new business applications
The creation of new small businesses is on the rise, with the U.S. reporting a higher than usual number of new business applications during the pandemic. In fact, in the third quarter of 2020 the U.S. experienced the highest quarter of new business applications since it began recording data about them in 2004, according to a NPR story. Employers globally have shed millions of permanent, full-time jobs and an increasing number of these laid-off workers are starting their own companies.

COVID as an accelerator — is making the future come faster
Culturally, a lot of companies have been completely dependent on different kinds of in-person activities. The pandemic has pushed them out of their comfort zone and increased the need to become more (resource) efficient and flexible.

Automation on the rise
There is also a lot of demand for simplifying processes for companies, both big and small, and to automate simple tasks entirely. This presents a huge opportunity for RPA providers such as UiPath and other automation companies and this trend is unlikely going to slow down.

Work management becomes even more important with remote work
Work management software such as Scoro provides a more horizontal approach. Companies finally need to let go of measuring when and how and where people show up. Instead, they need to measure the outcomes. It starts with creating a proper structure and understanding what is actually moving the needle in order to become more proactive about time management. Consequently, an integrated data and management approach is needed to support workers across various areas such as project management, customer relationship management, finance, etc.

The increased need for easy to use end-to-end solutions
SMEs increasingly expect turnkey solutions. Especially younger people have an increasingly low tolerance for poor (software) experiences. It's essential that solutions are well-targeted and designed to be super easy for customers to use. The fragmentation of countless niche tools that are available in the market also increases the need for more horizontal solutions or integration platforms supporting best of breed packages.

Make it easier for people to start solo companies
With the increasing amount of people starting to freelance (or start companies), the hassle already starts at the very beginning to establish and then manage a legal entity. Companies like Xolo aim to significantly reduce that burden and even offer people a platform to invoice their customers without the need to register a company themselves. They also use programs like Estonias e-Residency to enable people to start companies remotely and consequently help their customers with accounting and other services.

Increased need to manage risks in a flexible way
New business owners need insurance but due to the uncertainty caused, prefer not to take out the annual policies offered by traditional insurers. On-demand insurance battles a legacy model and fuels a new era. According to Thimble, an on-demand business insurance provider, there is an incredible rise in demand not only from micro-entrepreneurs and small businesses but also from bigger businesses, who, due to the pandemic, can’t forecast what’s going to happen.

Growing cybersecurity and IT support needs
New businesses, along with existing SMEs, are in need of all kinds of IT support services. Beyond IT troubleshooting, cybersecurity is among the top priorities for companies both big and small in the time of COVID (sudden move to WFH and leaving the safe corporate network). Workers have taken their professional machines home and they’re all going through VPNs. This has caused a shift in rethinking around how a lot of security is being implemented and where the security infrastructure gets deployed.

New customer opportunities
Previously perceived doors that seemed impossible to open suddenly are open for exploration. An example is booking platforms such as Booksy. They suddenly saw banks and telecommunication companies, for example, starting to worry about controlling — and limiting — the number of people visiting their branches in order to keep employees safe and abide by government rules.

Will the future workplace be a hybrid model?
What will small businesses look like six to twelve months from now, when we’re hopefully not government-mandated to stay home and where people do their work becomes more of a choice? — What does that hybrid workplace look like? We need to figure out what the tools and services needed to serve those businesses will look like.

The journey ahead…
Entrepreneurs need to come to work thinking about ‘how do we empower these small businesses to compete and take on large enterprises?’ If that mindset is in place, then small businesses will end up building the right tools and products. What’s really exciting is the room for many people to step up and empower SMEs to grow and take on their large entrenched competitors.