U.S. businesses are becoming increasingly confident they will return to pre-pandemic revenue levels by the end of 2021, according to the 2021 Return to Growth Outlook report from cloud business management technology maker Sage.
The survey, which polled more than 1000 finance leaders across American small and midsize businesses, also indicates that many intend to keep the new business strategies implemented during the pandemic.
Sage’s 2021 Return to Growth Outlook report demonstrates many small and midsize companies are becoming increasingly hopeful that business conditions will improve in the second half of this year. While only one-in-three (30%) finance leaders expect to see revenue reach or exceed pre-pandemic levels by the end of June 2021, 73% expect to achieve this mark by the end of this year. Many businesses (56%) also expect vaccine rollout efforts to positively impact their business by October.
Pandemic significantly accelerates digital transformation efforts
To adapt to the needs created by national lockdowns, more than half (52%) of those surveyed say they accelerated digital transformation plans by three years or more. When asked which areas were prioritized in digitization efforts, accounting/finance (45%) was the most popular, followed by marketing (31%) and customer relationship management (26%).
When looking at what technology proved to be the most valuable over the last year, more than one-quarter (27%) of businesses surveyed said cloud accounting software was a “saving grace” solution, providing finance teams with complete visibility, remote access to real-time data, improved efficiencies, better decision making, and seamless cash-flow management. Businesses clearly see the value in cloud-based financial software, with nine in ten businesses surveyed using or planning to invest in these systems in 2021.
The confidence shown by many businesses reflects success implementing new policies and strategies over the past year. Just under one-third (32%) of respondents acknowledged trying social media advertising for the first time, while 23% hired employees completely digitally for the first time. Interestingly, over one-quarter (27%) of businesses said they implemented non-traditional HR policies – such as childcare stipends or flexible work arrangements – for the first time over the course of the pandemic. In what could reflect a burgeoning trend in U.S. businesses, only 13% of respondents intend to reduce budgets for these policies this year.
“It’s no surprise the COVID-19 pandemic disproportionately affected small and midsize businesses, along with their employees and customers. As we faced unique challenges at home and work, businesses saw great success implementing new programs, offering flexible work arrangements, and prioritizing commitment to the communities in which they operate,” said Nancy Harris, EVP and Managing Director, Sage North America. “As the world begins to reopen, it is critical that these key learnings from the last year are not lost, and that organizations continue to leverage creativity and technology to foster stronger relationships with employees, customers, and prospects for continued growth.”
Additional highlighted findings from the survey report include:
- The most significant government support program was the federal government’s Payroll Protection Program (PPP), as one-third of businesses surveyed cited the availability of government assistance as a key reason for business survival over the past 12 months.
- When asked what government aid would bring the most positive impact over the next year, 52% said increased funding for COVID-19 testing and additional safety measures, followed by 47% noting more employee support – either in the form of stimulus or increased funding for items such as childcare – would be most helpful.
- Among those surveyed, finance leaders from companies with fewer than 250 employees were not only the most pessimistic about achieving revenue growth over the coming year, but they were also the most likely group to have been forced into either furloughing staff or reducing budget last year.
- For those who accelerated their digital transformation efforts, 40% of businesses believe they have become much more connected to their customers during the pandemic. However, this drops to just 11% among companies with fewer than 250 employees – the sector of respondents least able to invest in digital efforts over the last year.
- In fact, 23% of these smallest businesses admit to feeling more disconnected from their customers, compared to only 8% of all respondents.
- Despite the economic turndown, 88% of businesses made some sort of charitable donation to their local community, and 49% are planning to further increase these programs next year – reinforcing their commitment to make charitable giving a priority.
- Four in five (79%) businesses anticipate chief financial officers will have more influence on the direction and success of their business in 2021. In fact, respondents expect finance to play a more active role in technology-based decisions (40%) and strategic planning discussions (26%).
- Finance professionals also extended their career skillsets significantly last year, as finance teams became a more integral part of all decisions.
- Almost half (41%) of finance teams believe they’ve improved their technology skills, while many believe they’ve improved their management skills (29%) and soft skills (27%).
- When it comes to the reopening of workplaces, most businesses recognize the impact that increased employee recognition programs can have on loyalty and performance, with 87% saying that they have no plans to roll back the increased healthcare benefits provided during the pandemic, and 99% intend to maintain the same level of childcare/child-friendly office support.
- Only 16% of companies are decreasing budgets for employee food and in office perks throughout the year, showing many are planning for some form of office return.
To learn more, please download the full 2021 Return to Growth Outlook report.