The COVID-19 pandemic has had an enormous impact on the field of entrepreneurship. Many entrepreneurs had to adjust their business plans virtually overnight while shifts in the market created exciting new opportunities for people to create their own businesses. Entrepreneurship will likely play an extremely important role in the world’s economic recovery from the pandemic.
That being said, entrepreneurship and startup culture may have changed permanently as a result of the coronavirus. While it is impossible to predict the exact impact of the pandemic on entrepreneurship around the world, the changes it caused will likely be on the minds of business owners for decades to come.
Some of the changes that we will likely see in the field of entrepreneurship include:
1. A greater emphasis on financial resilience.
Early into the pandemic, it became very obvious how fragile many of the businesses operating across the United States really are. Startups in particular often have very limited working capital and thin margins.
Unfortunately, this means that businesses not able to change their profit model quickly were not able to survive. According to the most recent research, about 60 percent of business closures due to COVID-19 that were initially considered temporary are already deemed permanent.
Much of this data comes from restaurants and local businesses rather than startups, but entrepreneurs have still felt the burn of limited finances in an unstable market. Moving forward, entrepreneurs will likely put much more emphasis on having adequate cash flows and liquidity.
This may mean creating and sticking to stricter budgets. Having more liquidity equates to greater financial resilience, and ultimately, thin margins may be seen as unacceptable for a business’ survival.
2. The embrace of digital marketing.
Digital marketing has become standard during the pandemic for both established companies and startups. Because of the pandemic, messaging often needed to change very quickly. This made it very difficult to embrace more traditional forms of marketing like printed advertisements and even direct mailers.
Additionally, the pandemic made it difficult to create new content because of social distancing rules. As a result, many companies started to rely more heavily on existing digital content.
This trend will likely continue after the pandemic subsides. Companies are learning that it is fast, cheap, and effective to rely digital marketing over more traditional outlets. Digital marketing efforts include emails, targeted ads, search engine optimization, and more.
With these approaches, companies can be extremely targeted and topical with their message, which increases consumer trust. As companies spend more money on their digital presence, new marketing technologies will likely arise. As new tactics emerge, a digital approach will remain the best decision even after the pandemic has ended.
3. More leeway for remote working conditions.
Perhaps the most obvious impact of the pandemic on busines processes is where workers are located. In late 2020, research found that more than 40 percent of the American workforce is working from home on a full-time basis. Whenever possible, business processes were made digital to increase distancing and limit the spread of the virus.
Businesses that were already playing with the idea of remote work have now gone completely virtual. Even companies once staunchly against letting their employees work from home have embraced this new model.
The effect is that both business owners and employees now see the benefits of this model. Employees enjoy more flexibility and free time as well as more control over work environments.
Business owners have recognized that this setup has led to improved morale and productivity. Moreover, companies are saving money on office space. Moving forward, it would make sense for entrepreneurs to plan a remote workforce from the very conception of the company.
4. More robust contingency plans.
The pandemic highlighted the inherent challenge of adjusting to unforeseen circumstances at the drop of a hat. As a result, entrepreneurs will likely have more interest in creating robust backup plans as they develop their companies.
What this could look like on the ground is businesses with multiple lines of revenues operating simultaneously from the very beginning. Diversifying revenue streams is key to resilience.
If a company has four revenue streams, it will not spell disaster if one of them is interrupted. Even if two fail, the company will likely have enough income to recenter itself. This is not possible with only one revenue stream or bonds select that streams that are too reliant on one another.
Entire business plans may see a shift toward explicit backup plans. If the main idea fails, can the company still be successful? Proving this to investors could be key to getting funding in the coming years. Investors will want to know that the company is ready to pivot, if necessary.