Daily money

COVID-19 businesses: The age of the new entrepreneur

When you learn to drive an automatically transmitted vehicle, you’re more likely to struggle to operate a manual one. But, if you learn the hard way first, you can easily drive both.

What does this have to do with entrepreneurship?

Well, businesses founded pre-pandemic operated in a world of predictability. They were mostly set in their ways and, in turn, were hit hard when lockdown changed everything. However, businesses founded during the pandemic learned how to operate during hard times, giving them a better chance of adapting to change.

In other words, pre-pandemic businesses needed to learn how to go from the metaphorical automated transmission to manual transmission, whereas pandemic businesses started “driving a manual” and could adapt to both easily.

So, does this mean the COVID-19 business generation is more likely to succeed? It’s too soon to tell, but they are certainly more confident and adaptable, according to new research from Sage.

Learning to swim in the deep end

Despite facing more challenges related to staffing, recruiting talent, productivity, and general lack of government funding, 57% of the COVID-19 generation businesses are confident in their revenue growth for the next six months – versus 48% of pre-pandemic business confidence.

Moreover, many COVID-19 businesses started using tech from the get-go, minimising the need for the digital transformation that many pre-pandemic SMEs had to navigate.

“The way we make money has changed, and so has the way we manage it. Making money online used to be rare; now, it’s normal. The same goes for how we manage our money. We used to have to do our accounting manually, but now we use cloud accounting,” says Thandolwethu Ndlovu from Small Steps to Freedom.

Confidence in numbers

In the 2022 global Small Business, Big Opportunity survey, Sage interviewed over 13,000 SMEs in 11 countries on how they are faring two years into the pandemic. Our research included more than 1,000 South African SMEs to get insight into how they’re currently doing and how they feel about the future.

The results revealed that COVID-19 businesses are, on average, more confident than pre-pandemic SMEs:

  • 91% expect to switch to more sustainable products and services,
  • 53% expect to be better able to deal with increased costs in the next 12 months, compared to 38% of pre-pandemic businesses,
  • 66% expect to be better able to deal with cash flow in the next 12 months, compared to 51% of pre-pandemic companies, and
  • 63% expect to be better able to operate through COVID-19, compared to 55% of pre-pandemic businesses.

So, what does the resilient entrepreneur look like?

  • More likely to be young (41% of them are in the 18-34 age bracket)
  • Less likely than average to have received government funding
  • More likely to work in technology (11%) and professional services (11%)

“The upside of starting Foundhers Circle in 2021 is that we were in the middle of COVID-19, so people had already started adapting to a COVID-friendly business model,” says Keitumetse Pule from Foundhers Circle.

Why are COVID-19 businesses so confident?

The COVID-19 generation of entrepreneurs launched their businesses when remote working went from a futuristic prospect to immediate effect, which means they’ve already researched and discovered ways of working in a virtual environment.

For example, pre-pandemic businesses struggled to go from office-based to remote working. Parents were shellshocked when their children were at home, employers had to adapt to not having complete control over their employees, and organisations couldn’t host conferences or meetings in person.

However, COVID-19 businesses were already familiar with these requirements and the new technologies that made them possible. And now that the pandemic and lockdown restrictions are easing, COVID-19 SMEs realise it’s smooth sailing from here.

Cloud assurance

Although many businesses have adopted a hybrid working set-up, those that already have cloud technology have the assurance that they can make any type of environment work.

That’s because cloud technology promotes resilience by:

  1. Reducing costs

Instead of paying hefty hardware or software costs, SMEs can lower their operating costs by only paying for the cloud services that they use. What’s more, if you’ve ever wanted to reduce your utility costs, cloud technology gives you access to your workflows from wherever you are, saving on rent and electricity bills.

  1. Enabling scalability

Increase or decrease your cloud technology whenever you need to. As your business grows, you can scale your IT solutions to accommodate your growth or scale down during quiet periods and save some money.

  1. Increasing flexibility

You and your employees can complete tasks, have instant access to information, and automate and combine workflows with a few clicks of a button. Like businesses adapt to technology, cloud technology also adapts to your business. It supports how you want to run your business instead of restricting it when times get tough (like in a pandemic).

  1. Saving time

Monotonous admin tasks can steal anywhere from three- to four hours per day. The average employee spends 20 hours a week doing manual tasks that can easily be automated using cloud technology.

  1. Giving real-time insight

If you have an internet connection, you’re already halfway there. Cloud technology gives you access to real-time data with live feeds. No more walking around the office asking for progress updates or lengthy reports; the cloud does everything for you in real-time.

Read our guide to choosing the right technology for your business, or get started with a free Sage Business Cloud Accounting trial.

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