Why Digital Tools Are Vital for Small Business Recovery

The past 16 months have been the most difficult and uncertain times in a century for America’s small businesses. Many small businesses closed their doors permanently during the pandemic. Still, many survived and built themselves a stronger future by using what we call the Digital Safety Net — free and low-cost small business tools that include online marketing, social media, ecommerce, financial and organizational software, and online marketplaces.

Our Digitally Driven 2021 Report includes survey responses from thousands of businesses over a full year of the pandemic, including exclusive state-level polling, and the data is clear. The majority of Texas small businesses recognize the importance of digital tools and their critical role during the pandemic. Those that adopted Digital Safety Net tools performed significantly better during the pandemic and expanded their use of digital tools during the crisis.

The poll in Texas found that:
● 84% of small business owners believe that digital tools make their job easier
● 77% say that digital tools are important for running their business
● 62% agree that the government should not be wasting taxpayer dollars attacking companies that help small businesses
● 60% agree that breaking up tech companies will make it harder and more expensive to run a business

Becoming advanced

Digitally Driven 2021 shows that digitally advanced small businesses, those that intensively adopted Digital Safety Net tools pre-pandemic, lost only 12 percent of revenue during COVID-19 compared to 23 percent revenue losses for digitally uncertain small businesses. Digitally advanced businesses also hired new employees at more than twice the rate of their digitally skeptical counterparts, and digitally advanced firms are more confident, with 88 percent expecting to make new hires this year compared to only 36 percent of digitally uncertain businesses.

The report also shows that certain types of digital tools are the most valuable to small businesses. These include online training platforms, business and data analytics, online hiring platforms, and website ecommerce. Businesses that used online training platforms reported nearly five times better revenue than those that did not; those that used business/data analytics tools generated four times better revenue; and businesses that used online hiring platforms and website ecommerce generated 3.5 times better revenue.

It is no surprise that advanced small businesses were using these tools at significantly higher rates than uncertain businesses. This almost certainly contributed to their better customer retention, customer acquisition, and revenue.

Overcoming skepticism

More than a quarter of small businesses have yet to significantly adopt digital tools. The government can help millions of uncertain small businesses, and help them become stronger and more resilient. Working with the private sector will provide more education and training opportunities. As a result, this will help them engage with the Digital Safety Net. Additionally, they can provide education about which tools provide the most value, best practices for implementing these tools for businesses with no experience in the digital ecosystem, and provide updated courses and training. This will ensure businesses can stay current on the tools available and how best to use them.

A fundamental economic and small business policy goal should be to convert digitally uncertain businesses into digitally advanced ones. If the government, small business advocates, and technology companies work together, they can achieve this goal and the small business recovery can work for millions more businesses.

-Jake Ward, President, Connected Commerce Council