There’s an old saying: The (small business) show must go on. Well, that’s not exactly how it goes, but it’s the truth. Unlike other industries that are much more dependent on the whims of the stock market, the small business service economy remains steady despite volatile economic periods, like the one we are currently facing.
Small business revenues rose by an average of 87% between July 2022 and the previous year, and 80% of small business owners were confident they could withstand a potential U.S. recession, according to a recent report from American Express and Kabbage. Owners in the small business service economy are looking to leverage this growth by leaning into digital transformation, and integrated SaaS solutions may be the key to helping them scale.
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What’s Fueling the Small Business Service Economy Growth?
Experts point to the post-pandemic reopening of events and travel as one source of renewed optimism. Jeff Keer, CEO of Planning Pod, an all-in-one event management SaaS for event planners and venues, couldn’t agree more. “Right now, we’re going through a period of fast growth,” said Keer. “Events are back, and they’re back better than ever — many of our clients are booked until 2023, some of them 2024.”
Travel is also booming. A recent report by Bank of America Institute showed small businesses signs of resilience, including increased credit and debit card spending and business travel expenditures. The number of travel transactions in the small business economy, per client, is at its highest level since the pandemic began.
Small Service Businesses Scale Using Digital Tools
Service business owners enjoying this period of growth know that what got them to this point may be different from what allows them to keep growing in the future. Customers have different expectations post-pandemic. Business owners are surviving by investing in digital transformation, prioritizing mobile and strengthening their data analytics capabilities. 80% of businesses fast-tracked at least some digital transformation programs in 2020 according to a recent survey from Dell Technologies.
Matt Kauzlarich, founder of The Studio Director, a dance studio management software, saw how the pandemic impacted dance studios. “While there have been so many sad, unfortunate instances where studios were forced to close, it’s not been anywhere near our original predictions,” Kauzlarich said. “Studio owners were incredibly resilient, pivoting to meet the moment.”
Kauzlarich sees data as one major tool for small business growth. “I ask owners, ‘how much money does the average student bring in? What’s your retention rate?’ A robust studio management software can give them insights into making better business decisions and driving revenue.”
Moving from low-tech, high-touch business processes to an integrated software solution is helping many businesses exponentially drive growth.
“Whether you’re planning an event or you’re running a venue, having all those parts and pieces scattered across many different applications, pieces of paper, Post-its and emails, it gets so cluttered that it’s frustrating for these people, but it’s also a bit terrifying because if some of those details fall through the cracks,” said Keer.
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The Customer is King
Ultimately, those small businesses that survived the pandemic and came out on the other side thriving did so by prioritizing the customer experience. “We’re going to double down on serving people in the events industry, in the live events industry,” said Keer. “We’ve built out more and more tools to help maintain and sustain their businesses after the pandemic was over, and it’s paid off for us.”
In particular, consumers are craving payment flexibility, including mobile wallets and the set-it-and-forget-it payment plans they enjoyed during the pandemic. Owners in the small business service economy that offer digital payments provide a better customer experience, increase customer stickiness, reduce churn, and improve customer satisfaction.
Exemplary customer service is also top of the list for Kauzlarich. “Savvy studio owners know that change is inevitable,” he said. “Being resilient means staying on top of trends and solving problems for families and their students. The right management software will remove friction for customers and drive communication.”
For small service-based businesses, the future looks bright despite the recent economic woes. The industry is growing and looking for new ways to serve their customers.
“We’re growing pretty quickly in an industry that’s really coming back after COVID,” said Keer. “It’s almost overwhelming the backlog of all of that event activity that was on hold. People want to be together. That’s the biggest thing that everybody missed during the pandemic.”
David Sharp is president of PaySimple. He has 26 years of experience in the payments and software industry and has led business development for payment network processing, agent bank and ISO programs, as well as a variety of alternative payment solutions.