The COVID-19 pandemic has upended virtually every sector of the global economy — especially for small and medium-sized businesses (SMBs). As restrictions continue to ease, companies across every industry are taking a hard look at the lessons they've learned, what strategies they can carry forward into the post-pandemic era, and what steps they can take to return to high-growth mode.
To obtain a clearer picture of this vastly transformed business and economic landscape, Sage recently surveyed more than 1,000 US finance executives at small and medium-sized businesses about the major issues they're contending with. The results from this survey — the Sage 2021 Return to Growth Outlook Report — uncovered how businesses adapted during the COVID-19 pandemic, the key drivers of business growth, and the strategic outlook for the year ahead and beyond.
The report contains good news. Most companies across the US not only survived the COVID-19 pandemic, they readied themselves to rebound even stronger by developing greater agility, leveraging more technology, and finding new ways to connect with customers, employees, and the community. The report showed that, overall, 73% of US businesses expect they will return to pre-pandemic revenue levels by the end of 2021, in part by maintaining many of the business strategies they implemented to cope with the pandemic.
Embracing digital transformation
Unsurprisingly, the national lockdown led many companies (52% in the Sage survey) to accelerate their digital transformation plans by three years or more. Accounting/finance (45%) was the top priority for these transformational efforts, followed by marketing (31%) and customer relationship management (26%).
As for what technology proved to be the most valuable over the last year? For 27% of businesses, cloud accounting software was identified as a "saving grace" by delivering outsized value, providing finance teams with greater visibility, remote access to real-time data, improved efficiencies, better decision-making, and seamless cash-flow management. The report also notes that 90% of businesses surveyed use or plan to invest in these systems in 2021.
For those who accelerated their digital transformation efforts, 40% of businesses believe they have become much more connected to their customers during the pandemic. However, this drops to just 11% among companies with fewer than 250 employees — the sector of respondents least able to invest in digital efforts over the last year.
As the world begins to reopen, it is critical that these key learnings from the last year are not lost and that organizations continue to leverage creativity and technology to foster stronger relationships with employees, customers, and prospects for continued growth.
Challenges for smaller businesses remain
Nonetheless, our survey found that smaller businesses are clearly still struggling and continue to disproportionately bear the brunt of the COVID-19 pandemic. That may not change in the near term. Among those surveyed, finance leaders from companies with fewer than 250 employees were not only the most pessimistic about achieving revenue growth over the coming year, they were also the most likely group to have been forced into either furloughing staff or reducing budget last year. In fact, 23% of these smallest businesses admit to feeling more disconnected from their customers, compared to only 8% of all respondents.
Government assistance has helped — and respondents noted more is likely still needed. One-third of survey respondents cited the US Small Business Administration's Payroll Protection Program as a key reason for business survival over the preceding 12 months. They also noted a need for increased funding for COVID-19 testing as businesses reopen offices, heightened safety measures, and more employee support through additional stimulus payments or increased funding for childcare.
A stronger role for finance
For finance, one silver lining has emerged from the pandemic. Four in five (79%) businesses anticipate that chief financial officers will have a greater influence on the direction and success of their business in 2021. In fact, respondents expect finance to play a more active role in technology-based decisions (40%) and strategic planning discussions (26%).
Finance professionals also extended their career skillsets significantly last year, as their influence grew. More than 40% of finance teams believe they've improved their technology skills, while many believe they've improved their management skills (29%) and soft skills (27%).
As the post-pandemic era takes shape, businesses have cause for optimism as they pursue their own road to economic recovery. Get more insights about these and other topics in the Sage 2021 Return to Growth Outlook Report, and hear from finance leaders about their stories navigating the pandemic.