Small business revenue in the U.S. took a considerable and obvious hit between late-March and May of 2020. These companies, identified by the Small Business Administration as those with less than $5 million in annual revenue or with less than 50 employees, make up the vast majority of the promotional marketing industry. This national revenue decline, which bottomed out at around a 40 percent regression, matches what most of the industry experienced going into Q2.
A recovery peak was reached in mid-June with a plateau from that date of 10 to 15 percent decline in year on year revenue. Equally visible, the employment change of small business which ultimately lost more than 50 percent of the regular workforce in April, has begun to see a return in recent weeks.
The one consideration that can be made despite these obvious metrics is that time has given way to understanding. Revenue and employment among small businesses continues to rise, albeit slowly, as companies learn to navigate their new environment. So, what are companies doing to get by and what lessons does this have for you?
According to a study by LinkedIn, sales professionals are among the most confident in the current workforce. This is because of their ability to adapt to what is selling. Focus on the market that you know best, which hopefully is promo, and then assess what within that category is selling or what has the potential to sell. You can achieve this in many ways, but the most effective is to look at consumer trends. In early January there were massive indications that hand sanitizer, masks, and other PPE would be highly demanded this year, as one example. Present consumer trend indicators point to a more substantial investment coming in the work-from-home sector, a significant need in the job search category, and more robust needs pertaining to virtual events, as more recent examples.
One of the more challenging concepts to a well-established businessperson is learning a new market. Typically, the excuse to not immerse oneself in a new market has to do with a lack of time in order to comprehend the opportunity. But what most of us hear frequently is that we have more time than ever. Now is the time to learn something new.
This isn’t only learning about a new industry to market to or learning a new product line. It means immersing yourself in all you can find. Become the expert in the field. Seek out new knowledge that no one else is taking time to learn.
For small businesses in our industry the concept of digital is two-fold. One, it is a necessity of having a solid digital platform for customers to interact with you regularly and in a virtual space. The second is a comprehension of the digital marketplace and how the tangible (promo) can and should interact with the intangible (virtual).
People of all walks of life are more and more disconnected from the positive psychology of the physical world. You have the power to give them some of that good feeling back. But it first takes an understanding of how these two worlds should align. Again, design your own expertise here.
Many small businesses are learning that this is not the time to compete for the biggest orders. This is because an order of any size means long-term and future value. Companies are increasingly playing it safe when it comes to their finances. We are an opportune industry to help companies spread out their budgets all the while creating longevity for ourselves. Companies cannot go dark, but they also need to be mindful of their spend.
Competition is also rapidly changing and our ability to maintain a competitive advantage is constantly tested. This is true regardless of our environment, but it has been tested like never before in recent months. While the wants and needs of customers have altered, the products offerings have changed, and the delivery mechanisms have been interrupted, the fundamentals of competition remain true. We compete in order to succeed.
There has been an influx of “new” information coming from varying perspectives about how to compete despite this changing situation. No question, most of us have had to adapt our process and have probably had to continue to reevaluate our market. But are the components of competition in this market really that revolutionary and is this new information all that valuable?
One thing we can agree on, there is a lot of noise out there. We especially reside in a market with a lot of opinions about how to address the challenges we are facing. This causes undue reactiveness and outright strategic changes when perhaps proactively monitoring and responding to the situation is best. The difficulty in reacting to such a volatile market is that it causes undue stress on our business practices. The working environment is stressful enough. We also don’t know what the future holds and anyone that says they have it worked out is misleading.
Your clients are also listening to the noise. The fundamental rule of competitive advantage is familiarity. This is especially true as you, and your clients, continue to navigate an unfamiliar situation. Your ability to maintain some resemblance of consistency showcases your natural competitive advantage. You have made it this far in your business most likely by listening to the most valuable source of information, yourself. Think about businesses forced to totally change their tactics in order to compete. Wouldn’t it be nice if they could engage with someone who has been able to take a “business as usual” approach?
There is no doubt that a lot of good information will come result this challenging situation. Businesses will learn about preparedness for unforeseen events like they would have never been able to before. But many will learn that reactiveness, especially during an unforeseen event, is harmful to their long-term operations. Filter the noise according to your standards and not those suggested for you. You clients will respond to your ability to be a constant in their world.
If you look at businesses who have been able to maintain their market share and have even grown their diffusion, a key factor remains constant, less is more. For example, we have not seen a manufacturing response to critical need at this level since WWII. But this doesn’t mean that these businesses totally redeveloped their process. They simply adjusted their product offerings but were able to maintain competition through the process they have worked years or decades to achieve. They didn’t lose sight of what gave them a competitive advantage previously but amended that process to aid in the cause. This means that when they slow their pandemic response manufacturing, they will be able to more quickly and seamlessly return to their usual product line.
When randomly polling business leaders about what they wish they had done differently as this crisis evolved and what they need to get better about now, one area continues to emerge: reach out to clients more proactively.
During the early days of this event we were all scrambling to assess the situation and ensure our businesses, our families, and our livelihoods were protected. Because of this, a sense of isolation was felt by many throughout a multitude of market sectors. But the ones who maintained their market share early were the ones who adopted a “we are here when you need us” strategy.
That is often a difficult tactic as it has no guarantee attached. But the value, especially now, is immeasurable. The good news is that it is never too late to check in. Your clients need an outlet just as much as you do. Our industry is so much more than tangible products. Now is the time to demonstrate that and take pride in it.
The AIM Advantage is one that meets the delicate challenges of our day but does so with unity and consistency in mind. The word “ganbare” means to persevere, to strive for greatness, but to do so in collaboration. This is the value of AIM. It is a community that is uniquely supported to meet the demands of the industry and the greater market through thoughtful and organic collaboration.
by Seth Barnett, VP Content Development