The pandemic brings us into 2022 with a sense of optimism.
While that statement may seem counterintuitive as variants dominate headlines, Prashant Gandhi, chief buisness officer at Melio, told PYMNTS in a recent interview that Main Street small- to medium-sized businesses (SMBs) are well-prepared for whatever comes next.
The conversation came after research by PYMNTS and Melio found that 64% of Main Street businesses are optimistic that the economic recovery will continue in 2022, while just 26% expect revenue to be unchanged.
SMBs’ attitudes are being buoyed by the continued willingness of consumers to spend money, Gandhi said. Individuals and families have saved money, tied in part to stimulus disbursements, and they’ve resumed going to events and visiting stores in person.
“Things are starting to return to normal,” said Gandhi.
Innovating to Survive — Then Thrive
Along the way toward some semblance of normalcy, and during the pandemic, many of these smaller firms had diversified distribution, especially online, which in turn gave them a wider presence across their communities and consumers’ lives.
In doing so, these businesses have proved to themselves — and their competitors — that they can be nimble and respond to shifting tastes and demands.
In one example, Gandhi said a Melio client that had previously been focused on making and distributing limoncello shifted during the pandemic to making lemon-scented hand sanitizers — using the same raw ingredients, of course.
Same inputs, different markets, but no interruption in top-line momentum. None of this is to say that SMBs are getting complacent, as the data shows that about a third of smaller firms still fear that bigger competitors will elbow them aside.
To avoid that scenario, Gandhi said, SMBs would do well to play to their competitive strengths, which includes their ability to focus on customer service up and down the supply chains, in addition to agility.
He offered another example, where a niche candy maker (also a Melio client) was able to serve large retailers when the big-name consumer packaged goods firms were having supply chain issues of their own and could not meet demand over the holidays.
“These smaller firms have invested deeply in their customer relationships,” said Gandhi.
Cutting Costs, Too
Just as these smaller companies have been able to keep top line momentum going, they’ve also been able to cut costs by amping up the use of Software-as-a-Service (SaaS) platforms — to manage payroll and inventory, for example — to keep costs low. They’ve also expanded their horizons when it comes to hiring workers, discovering the deep talent pool the gig economy offers.
“SMBs are constantly having to ask themselves how to do more with less,” he said, adding that they also have to be judicious about upgrading physical infrastructure.
As margins and top lines have improved, he said, companies have been buying up inventory as inflation becomes a key concern. They’re also keeping watchful eyes on the pandemic’s progression and on their daily cash flow needs, aided by technology that gives them sharper insight into receivables and payables.
Looking ahead, he said, on Main Street, “There is still optimism, there is still innovation and for small business, there’s been a real mindset shift in the past 12 months — and we’re seeing the tailwinds now.”