Five Key Trends for Small Business Success in the Year Ahead

The last two years have been an exercise in uncertainty as the global pandemic has transformed how we work, interact and conduct commerce. Perhaps no sector has been more under pressure than small business.

In a 2021 Visa survey, more than half (54%) of global small and micro-businesses (SMBs) reported that the last year has been a challenge for their business, and that they’re still recovering.

But as the pandemic wears on, trends are emerging as behaviors begin to stick. That is certainly true for consumer behavior, and we’ve seen that small businesses that embraced digital commerce have weathered the pandemic better. It’s no longer just about pivoting and surviving – there’s a hopeful surge in entrepreneurship, with a new breed of business owner coming online as digitally-native for the first time.

As the network working for everyone, Visa has made a multi-year commitment to digitally enable 50 million small businesses worldwide. We know that with the right tools, small businesses can confidently meet new customer expectations.

So how can these companies get an edge in a year ahead? Following are five of the important trends that will have an impact on the world of small and medium sized businesses in 2022.

1.????Now more than ever, experience will be king.

COVID-19 fundamentally changed retail – redefining the boundaries between online and in-store shopping, and opening up a world of omnichannel commerce. Considering that the average U.S. consumer is connected to 4.7 connected devices, 4.4 social platforms and 3.2 channels, SMBs need to rise to the challenge of engaging customers across all platforms.

The small businesses that come out on top in 2022 will be the ones that make experience king. Small businesses can no longer afford to think about consumers in unique buckets: people who shop online, people who shop in-store, people who shop in an app. The truth is that customers exist across all of these channels, so businesses need to be prepared for offer a fluid, omnichannel payments experience – one that is engaging, one that is safe, and one that is simple. ??

2.????Sustainability and social impact aren’t just for global brands anymore.

The pandemic was predicted to slow the momentum behind environmental consciousness among consumers, but the opposite is happening. McKinsey has found that one in four consumers plans to focus more on environmental issues and social impact going forward.[1]

Gen Z and millennials in particular will continue to gravitate toward artisanal goods that are ethically and sustainably sourced[2], as well as sustainably produced food and beverages. In many ways, small businesses are ideally suited to cater to the needs of socially conscious young consumers, particularly as the pandemic persists globally. A PwC study found that 56% of all consumers plan to purchase more from smaller, independent stores.[3] So while being a small business can inherently help, to really win, small businesses should also consider their impact on society – and be sure to communicate it with customers.

3.?????Seamless payments will be central to an exceptional customer experience.

Customers are increasingly paying attention to the speed, security and convenience of the payment experience in a world where transactions are shifting from cash to cards to digital devices, and customers expect every interaction with a brand to be effortless.

A recent study found that an average of 68% of people abandoned an online shopping cart due to difficulties completing the purchase – with many citing a complicated or long check out process, so they didn't make the purchase at all or bought the item somewhere else.[4]

Meanwhile, in stores, contactless payments are the norm in most parts of the world. And while contactless limits continue to increase, in the United States the technology has taken a bit longer to catch on. During the pandemic, that started to change. Many Americans chose to tap to pay for the first time, and instantly recognized that it’s also faster, easier and more secure. In fact, nearly half of consumers (49%) suggested that offering contactless payment methods is one of the most important safety measures stores can implement, and another 47% say they will not shop at a store that doesn’t offer a contactless way to pay.[5] 2022 will be the year that contactless “catches up” in the United States, thanks in many ways to the small and mid-size businesses that are quickly adopting the technology to keep up with their customers’ expectations.

Payments isn’t just about completing a sale. The checkout experience should be – and IS – a reflection of your brand. It’s also the last opportunity for small business owners to make a great impression on customers as they walk out the door (or leave your site). SMBs have to make it as frictionless as possible for customers.

4.????Small businesses will cross borders

According to The World Bank, small and medium-sized businesses (SMBs) represent approximately 90% of businesses and more than 50% of employment worldwide. Thanks to the digital adoption of the past two years and evolving technology, small businesses have a unique opportunity to bring products and services to customers around the globe.

It used to be that only big businesses could scale in a way that allowed them to access customers in other countries, but payment technology can easily enable customers to pay with local payment methods and currencies – businesses just need to be savvy enough to market themselves in a way that is enticing to different “local” audiences around the world. It is also important to keep on top of commercial and regulatory barriers, so finding a partner that supports cross-border expansion is key.

5.?????Small businesses will see more benefits from AI and machine learning

Much has been made of the ways in which artificial intelligence (AI), machine learning and deep learning are transforming large business processes from credit decisioning to inventory management. As software and hardware costs decrease, more solutions for small businesses that leverage AI and machine learning will become available. Why does that matter? Services powered by AI and ML can mean more efficiencies, more protections, and ultimately more profit for the bottom line.

In many ways AI is already being adopted by small businesses behind the scenes. Organizations like Visa use AI and deep learning to make real-time authorization decisions for small business transactions, and financial services companies use the technology to offer customer installment loans. Many tech companies that provide a service to SMBs are doing the same. Businesses should ensure their suppliers are investing in these important technologies and passing the benefits of their expertise on.

In a year that will be defined by new expectations and new experiences, the good news is that technology is opening new opportunities for businesses of any size to participate in the global digital economy.

[1] Source: https://www.mckinsey.com/industries/retail/our-insights/prioritizing-sustainability-in-the-consumer-sector

[2] First Insight Survey, The State of Consumer Spending Gen Z Shoppers Demand Sustainable Retail, December 2019, https://www.firstinsight.com/white-papers-posts/gen-z-shoppers-demand-sustainability

[3] https://www.pwc.com/us/en/industries/consumer-markets/library/2021-holiday-outlook.html#content-free-1-780d

[4] Barnard Institute Research, Cart & Checkout UX, 2021 Data, https://baymard.com/blog/ecommerce-checkout-usability-report-and-benchmark

[5] ?Visa Back to Business Study, 2021 Outlook, Global Small Business and Consumer Insights