Accelerated by COVID-19, the rapid shift to a much more digital world is having a profound impact on all aspects of our lives: how we shop, how we interact, how we work and how we do business.
For many small businesses, it’s a fight for survival as consumers are changing shopping habits to be more “touch free” and making a permanent move to the safety, security and convenience of contactless payments and anytime, anywhere online purchases.
Local merchants are the lifeblood of our economies and communities, so it’s imperative that we support them in this time of need and long into the future. It’s equally imperative that these businesses double down on the new digital economy to avoid getting left behind.
With people staying and working at home more, they want on-demand products and services as they go online for everything from food and clothing to video chats, courses and entertainment. Two recent studies – Mastercard SpendingPulse and a worldwide consumer survey by Mastercard – underscore just how quickly digital by default is becoming a lasting consumer habit that no one can afford to ignore.
In response, business models must be radically reshaped. For smaller merchants, survival and growth depend on staying open for business by being online, going contactless/touchless/remote and using technology to manage operations efficiently, capitalize on data insights and keep in close contact with customers to ensure their loyalty.
Going online is only one aspect. Going digital really requires end-to-end digital solutions.
Here are five tips for navigating and thriving in the evolving ecosystem:
Go online with a mobile-friendly website
As shoppers shift to the internet, having an online presence and communicating digitally are vital to the health of your business. It’s now a necessity for small brick-and-mortar businesses to take orders online, accept electronic payments and connect with logistics companies to get the goods to customers.
If you have a physical store, people assume that you’re online as well. Setting up an online storefront with items for sale and giving consumers the means to shop and pay online is the essential minimum. An app for mobile phones and a page on popular social media take your online presence to the next level.
Manage inventory efficiently and reduce delivery costs
People buying online and then picking up in store further necessitates robust inventory management. You will need to ensure the items you sell online are available for pick-up and set aside for customers so they have the best overall experience. Being able to track your stock on hand and have a clear line of sight with suppliers on the availability of high-demand items will save time and money.
Having financial flexibility is also important, especially in these tough times. Renegotiate payment terms with suppliers and scale delivery up and down to stay efficient and preserve cash flow.
Connect and communicate with your customers
Your presence on social media connects you with your customers and keeps your goods and services on their radar. Your online channels let you offer gift cards, discounts and buy-now, enjoy-later promotions that build loyalty and your brand.
You can also remind customers of saved carts and drive them to complete purchases. As part of the interaction, encourage people to leave reviews and share their experiences to build an even bigger and stronger customer base.
Maintain working capital resiliency
Getting access to credit, loans and disbursements such as grants or subsidies from governments and NGOs is critically important. In these times, you need to manage cash flow even more carefully and work towards building up incremental reserves as a financial cushion that can avert disaster.
It can be tough for small businesses to get loans and credit, which demands creativity and good digital record-keeping to establish your worthiness. Some banks and fintechs cater to small businesses, so show well-documented cash flow, expenses, revenues, on-time bill payments, inventory and supplier deliveries to prove your financial performance.
Once you have the funding via credit, loans or disbursements, you need immediate access to it. Payment systems that move the money electronically and swiftly are increasingly important, along with getting money onto pre-paid payroll and stimulus cards that can be used for purchases right away.
Operate in real time
When cash flow becomes tight, managing expenses and having better visibility of financial performance become critically important. Digital solutions with electronic invoicing and instant access to accounts receivable and payable data will give you a more informed view to make the right decisions.
Real-time payments and fintech solutions that allow you to pay any type of invoice can also help you manage cash flow, expenses and operations. Take the example of payment on delivery, when a merchant delivers goods and gets paid in cash by customers. The volume of cash builds up over the day, raising the risk of loss or theft, requiring frequent trips to the bank and consuming valuable time to reconcile the cash payments with the goods delivered.
Digital payments and data tracking eliminate the hassles, streamline operations and provide access to electronic funds instantly, securely and round the clock so you can focus on running your business more efficiently and profitably.
Preparing for the future starts now
There really is no doubt that the future is digital and that the shifts in consumer preferences, behavior and expectations are here to stay.
Many merchants have been caught off-guard by the rapid disruption and lack the skills and knowledge to join the digital economy. Luckily, there are cost-efficient solutions, expert advisors and learning materials to help small businesses get online, increase revenue across all channels, digitize payments, manage cash flow and expenses tightly and get access to credit and working capital.
At Mastercard, we’re working with unprecedented urgency to help small businesses now – including our $250 million pledge of support and our expanded commitment to financial inclusion – while also ensuring they have the right tools and the most valuable insights to make the most of the digital future.