Main Street SMBs Wax Optimistic On Surviving The COVID-19 Age

The dust is not settled. But things are not as bleak as they once were. Main Street businesses are optimistic about their longer-term survival — meaning that they believe their businesses will be around two years from now. That’s important, given the fact that Main Street SMBs are responsible for driving a significant portion of the economy, employing roughly 40 percent of the workforce.

To get some numbers in place: In June, less than half of SMBs surveyed by PYMNTS said they would survive into summer 2022 — and that number is now 54 percent. Interestingly, small business formation is at a multi-year high, as estimated by the Census Bureau.

Part of that optimism can be traced to the resilience of the multi-channel model, where PYMNTS has found that more than 60 percent of Main Street firms have at least three channels operating to drive sales: online, at physical stores and via the phone. PYMNTS found that 71 percent use online channels, 68 percent use physical stores, 66 percent use the telephone and 59 percent use marketplaces.

In an interview with Karen Webster, Visa’s Head of U.S. Small Business Solutions Matt Baker, Zoku Sushi CEO Charlie Yi and The Better Box owner Tamekah Bost said that innovations – particularly payments innovations – are helping to position them for a digital-first, and brighter, future.

At a high level, said Visa’s Baker, small business owners are by their very nature optimistic, pursuing their business dreams with passion. As a result of that passion, there is an added surge of optimism when small businesses see green shoots of recovery, spurred in part by government aid programs and at least some hints that business restrictions are likely to be lifted.

Those green shoots are just emerging. And while there’s some debate about whether they will last or prove to be ephemeral, right now it’s still a battle to keep the doors open, even the proverbial digital ones — especially for restaurants.

The digital shift, of course, has been well-documented, particularly in these digital pages – and it’s a shift that panelists said has been borne of necessity.

After all, they’ve been plying the trade in an age where restrictions and shutdowns have hobbled brick-and-mortar operations.

In fact, the one-two punch of business closures and public health concerns hobbled them so much that some firms, like Zoku Sushi, stared Armageddon in the face, with the ultimate end customers — in this case, other businesses, tied to the workday lunch crowd — simply vanished amid work-from-home mandates.

“It’s been a very rocky test,” said Yi, who added that his firm has sold to kitchen partners across the urban environment and directly to financial services firms in Manhattan.

As he told Webster, “95 percent of our sales were to those guys, and effectively that business closed down. By the nature of what we’re doing, it was very difficult for us to persist with a small portion of the folks who were lingering in offices.”

The company made the decision last month not to relaunch, even as some financial firms have been trickling back to on-site work.

Eyeing an eventual return to normalcy, “as far as the process going forward, we don’t know if or when that’s going to come. Obviously, the vaccine is good news. But I just don’t know exactly when that’s going to propel folks to come back to work in offices,” said Yi.

Thus, Zoku Sushi is in hibernation, looking optimistically to next year.

“But the B2B side may never come back to the numbers we want in the near term,” he noted — thus the company is considering a pivot to a solely B2C model.

Elsewhere, Bost, owner of Philadelphia’s The Better Box (focused on Asian fusion), said that among its three locations (the third opened just before the pandemic hit), there’s been a “huge investment” in brick-and-mortar and in-person dining.

Bost’s operations began first as a food truck, expanding to carryout and then to in-person dining. And now, according to Bost, “we have all this space that we’ve never been able to utilize appropriately” — yet she is still financially responsible for that space.

The Multi-Channel Strategy

In the bid to reach more wallets and mouths, some companies like Zoku are finding that digital interactions are a catch-22. Going to the aggregators means losing direct touch with end customers — and moving away from an extant “brand” as a ghost kitchen.

The aggregators themselves are in for economic pressure, as bit by bit, cities and states are imposing caps on commission fees.

With further commentary on the aggregators, Bost said Better Box has bypassed them, leveraging a peer company’s infrastructure to take orders and deliver them, while maintaining takeout windows at one of her locations.

“It’s important to use this time to not only survive, but to really think through” business models, said Yi — and that includes multiple strategies.

As Bost stated, the company has been utilizing what is effectively a blend of online and physical business models to generate topline in a year of rebranding and remodeling — and partnering with other companies as appropriate.

“We look toward changing our business model from dine-in to having takeout kiosks at places where people have to go and are deemed essential, which is supermarkets. So this past October, we opened our first kiosk location inside of the supermarket,” she said, featuring what she termed a “greatest hits” range of offerings.

In an effort to help foster those pivots, Baker pointed to Visa’s Small Business Hub, which helps smaller firms strategize, estimate costs and establish an online presence.

The Payments 

Regardless of the conduit, small businesses, in general, must accept and embrace the fact that consumers have changed the way they make payments, stated Visa’s Baker. That means merchants must consider offering tap-to-pay functionality, among other options.

There’s a benefit to the companies (in this case, the restaurants) as well, he stated — particularly in the B2B space. They can leverage digital means of getting paid and settling funds to their accounts more quickly.

“The quicker you can get paid, the quicker you can use that cash flow to pay suppliers or employees,” Baker noted. Bost echoed the sentiment that digital solutions — such as real-time settlement of daily sales available through point of sale (POS) in place — have helped her meet daily expenses with greater efficiency.

Waiting For The Vaccine 

For now, navigating the pandemic means waiting for the vaccine. And the panelists had some words of advice for legislators and others as they look toward making it through the next few months.

With a nod toward the restrictions in Philadelphia, Bost stated, “if you’re going to shut us down, offer us assistance. I know so many people who were closing their businesses, and I am potentially closing a business and changing my model and going through all of this with so much worry. I’m optimistic because we’ve survived this year, but these shutdowns are not supposed to lift until January.”

As Yi stated, there’s been less awareness of how widespread the impact has been on smaller firms, and as they do come back, it’s imperative that they have a clear picture about safety standards and how to keep workers and customers healthy.

How to keep businesses surviving so they can thrive is the $1 trillion question, said Visa’s Baker — and banks and issuers have a role to play in providing the right products and guidance to small business owners — in clear and simple language.

Digitization will ultimately help, as companies save time and money and cut down on paper-based processes, said Baker.

As this troubling year finally sunsets, according to the panel, there are reasons to be optimistic. Yi pointed to the fact that a new administration at the federal level will yield some clarity on vaccine rollouts and public health measures, which should help restaurants. Omnichannel efforts will take work, but will ultimately prove rewarding.

And, as Bost noted: “We are trying to make sure we have a game plan for the next few curveballs that might come our way, because if we learned anything this year, it’s to never think that you’re totally prepared. It’s essential to over-prepare. You never know what might happen — but we’ll be ready for it.”