Recall the bleak summer of 2020, when you’d have thought Main Street small to medium-sized businesses (SMBs) would be extinct by year’s end. It was understandably pessimistic, but it didn’t account for the sheer tenacity small business owners have repeatedly shown.
As part of the SMB-TV series done in collaboration with PayPal, PYMNTS’ Karen Webster was joined by Mark Madrid, head of the Office of Entrepreneurship for the U.S. Small Business Administration (SBA), D’Shawn Russell, owner at Southern Elegance Candle Co., and Ed Hallett, senior director, SMB, PayPal, describing new chapters in the SMB survive and thrive playbook.
Madrid pointed to the resilience of SMBs, from pandemic-driven overhauls to inflationary tornados.
“This is a once-in-a-lifetime event,” he said. “When you take into account the pandemic and now the surging prices, what they’re doing is pivoting. They’re being more agile. They’re talking about ‘Made in the USA’ to defeat supply chain vulnerability. And they’re thinking about 2023. I’ve never seen that spirit of planning more so than today.”
Resilience and agility were running themes, as Russell depicted the ordeal of navigating her small business through one crisis, then another. It took the form of seeking customer input that led to new products people value and added sales.
As a PayPal merchant, Russell said she leaned into that relationship to make sure customers could pay any way they wanted, maximizing conversions on a quickly revamped website during the worst of lockdowns when physical store traffic was virtually nonexistent.
“When we moved to having to shut down and only do online sales, one of the things we tried to do was make sure that our customers could pay any way possible,” Russell said.
“I had to learn how to scale very, very quickly,” Russell added. “The last two years have been all about scaling the company and growing the company until we got to this year, when everything slowed down and we moved into a recession.”
Saluting the resourcefulness of SMBs, Hallett said, “They need it more than ever in these times. D’Shawn a very good example of this. The businesses that have managed to adapt to changing consumer behavior are the businesses that end up prevailing, surviving and flourishing.
“The big change that D’Shawn mentioned was more and more consumers, mainly by force of lockdown, moving to buying digitally.”
And as they do, payments choice is decisive, he said.
See also: Main Street Health Q3 2022: SMBs Battle Inflation
Voice of the Shopper
While Russell was omnichannel already — “I tell everybody, if I could set up a table and sell a candle, we were there — school bazaars, church functions, I did not care — we were there selling candles” — she said becoming an online-first business was challenging.
“One of the things we did was reach out to our customers and say, ‘What is it exactly that you need during this unprecedented time? What fragrances would you like? What products would you like?’” she said. “As a result, we introduced room sprays. We introduced a lot of new options by asking our customers because … they’re in a pandemic also,” adopting new ways to shop and pay.
Madrid noted that the edict from SBA Administrator Isabella Casillas Guzman was “to be more customer first, technology forward and to advance equity.” That runs the gamut from reassessing SBA lending to services as requests around business management pour into the SBA.
Noting that 90% of all SMBs fail, Russell added, “I encourage all new entrepreneurs to make sure that they find a mentor, especially something like the Small Business Administration that can really tell them the truth about running a small business.”
Hallett said the digital shift accelerated by the pandemic has made some of this easier for SMBs, saying, “You can use your iPad and a point-of-sale application, many of them free, to do the math. That data then goes into a system which should automatically sync with your accounting software” while building up your business credit rating with payment providers.
He pointed to products like PayPal Working Capital that extend business financing using transaction history as a key metric, saying, “Payments should no longer be just a way of taking payment. It should be building a deeper relationship with your provider so they can provide easy access to capital that you can pay back through your sales.”
See also: PayPal Honey Sweetens the Pot for Shoppers and Merchants As Holidays Approach
Holiday 2022 Pregame Planning
Webster moved the discussion to tactical considerations for the coming holiday selling season that started in mid-October this year with Amazon Prime Early Access and other sales events.
Madrid enumerated SBA resources including 1,000 Small Business Development Centers (SBDCs), more than 150 women’s business centers, the SCORE program with 10,000+ volunteer business mentors, and its 250 SBA chapters coast-to-coast.
“We have to realize and internalize that small businesses don’t take a holiday break,” he said. “So, practical tools center around planning, what D’Shawn was talking about. They center on planning forward not only one quarter, but two quarters, three quarters, four quarters.”
A supporter of SBA programs that encourage peer-to-peer collaboration and community among SMBs, Russell said, “We have focused on during this time, price and value, because we realize that at this time, our customers are very price conscious.” She also continues to streamline ops.
SMBs today “have a very specific group of people that you are serving,” Russell continued. “It’s much easier now as a candle company that sells to people who love Southern living to talk directly to those people and ask, ‘What is it that you need from us? How can we support you?’
“Anytime you do that, that gives you information and insight that you would not have normally gained.”
An example of that is her insight on providing value, which also holds true for PayPal, where Hallett said PayPal Honey has saved consumers over $100 million so far in 2022.
“When you’ve done everything necessary to get a customer to that point of purchasing, you’ve done 95% of the work and you’ve probably spent a bit of money and time getting them to that point, make sure you give the customer the flexibility of payment options … to close the deal.”
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