Executive Vice President, Center for Capital Markets Competitiveness (CCMC), U.S. Chamber of Commerce
Executive Vice President, Center for Technology Engagement (C_TEC), U.S. Chamber of Commerce
Executive Vice President, Global Innovation Policy Center (GIPC), U.S. Chamber of Commerce
Senior Advisor to the President and CEO, U.S. Chamber of Commerce
July 29, 2020
Small businesses are a cornerstone of the American economy, contributing $6 trillion in economic output and employing 85 million Americans. Unfortunately, small businesses are also heavily impacted by the COVID-19 pandemic, with one in five closed either temporarily or permanently. With social distancing restrictions in place, small-business owners more than ever count on technology to reach consumers, market their products, and grow their business. Tech has been a critical lifeline for small businesses and consumers alike during the COVID-19 crisis.
Examining the use of digital platforms as a whole in the United States before the pandemic, the national small business survey finds that the use of digital platforms by small enterprises is ubiquitous:
- 84% of small enterprises are using at least one major digital platform to provide information to customers;
- 80% are using at least one major platform to show products and services, as well as to advertise;
- 79% are using digital tools to communicate with customers and suppliers; and
- 75% are using tech platforms for sales.
Now, during the pandemic, everything from the way consumers find and purchase products and services to the way small businesses market and ship their wares is enabled by technologies. As a McKinsey study found, the most effective way for small businesses to meet new hygiene and safety expectations is to design effective contactless experiences through adopting new technologies. For example, restaurants and retailers that have turned to digital capabilities and investments in technology fared far better since the pandemic began. In an SBE Council survey, around 76% of small businesses say that cloud services have been critical to the survival and operation of their business during COVID-19.
Clearly, technology has played a critical role in keeping American small businesses alive. As such, a Verizon Business survey found that 43% of small businesses plan on expanding their businesses through digital and related technology as a response to COVID-19, and 30% have already added ways to deliver products and services digitally.
To meet these increased demands and challenges, companies in broadband, data, social media, gig economy, automated vehicles, and more are stepping up to allow small businesses to continue to operate and serve communities. For example, delivery has become a lifeline for restaurants and grocery stores, with 81% reporting that they would have had to lay off staff members if not for third-party delivery, and 75% reporting that they would have had to close their business. And companies like Postmates have enacted small business relief programs to temporarily waive commission fees for businesses in certain locations.
To mitigate the effects of the pandemic, companies are also providing financial support, waiving fees, or providing other resources and information to small businesses. Google committed to a $200 million investment fund to help provide small businesses with access to capital, along with $340 million in Google Ads credits. Facebook committed to a $100 million grant program to help small businesses around the world, and launched a Business Resource Hub to help businesses cope with COVID-19 disruptions and keep connected to their customers. Many telecom companies have pledged not to terminate service to small business customers and to waive any late fees that may be incurred as a result of the pandemic.
Studies have shown that 73% of small businesses are not aware of digital resources, such as online payment processing tools, online productivity tools, e-commerce websites, online marketing and other tools, that can help them reach customers around the world. If small businesses had better access to global markets, it could increase the GDP of the United States by $81 billion and add 900,000 new jobs. During the pandemic, this could also mean the difference between thriving and closing for good.
It’s no question that small businesses are facing unprecedented challenges during the pandemic. Small businesses have needed to pivot to digital tools to conduct business. And technology companies have stepped up to help, invest in, and enable small businesses to continue serving their customers and communities. Policymakers and the business community each have key roles to play to ensure a robust technology ecosystem that enables small businesses across America can continue to thrive.
About the authors
Tom Quaadman develops and executes strategic policies to implement a global corporate financial reporting system, address ongoing attempts of minority shareholder abuse of the proxy system, communicate the benefits of efficient American capital markets, and promote an innovation economy and the long-term interests of all investors.