How Small- and Medium-Sized Businesses Can Combat Inflation With Tech Upgrades

By Gary Drenik | Forbes

With the cost of goods & services increasing and supply chain challenges, small business owners have been hit with whammy after whammy. We spoke with Joe Walsh, CEO of Thryv, a provider of SaaS, cloud-based business platform for small- to medium-businesses, about how technology has helped business owners face the looming economic crises.

Gary Drenik: How has inflation affected small and medium-sized businesses (SMBs), and has it impacted some small businesses more than others?

Joe Walsh: Thryv’s customers are primarily service-based businesses, so our customers are not typically the same as those who were so severely impacted by the pandemic or typical recession spending cuts like retail, restaurants, hospitality, etc. Our customers provide support for things that are less volatile, like necessary health & wellness or home repairs. And with 10% of Millennials saying that they were going to be buying a home in the next six months, according to a recent Prosper Insights & Analytics Survey, and 5% of Millennials saying that they were going to be selling a home in the next six months, home services businesses anticipate continued spending in their categories even as inflation (and an impending recession) continue to plague other small businesses.

That is not to say that inflation and supply chain constraints haven’t negatively impacted our service-based customers. We’re hearing from them that they’ve had to look for other ways to manage their businesses to combat increased real costs, higher business financing interest rates, and reduced availability of goods used to serve their customers. Technology provides an avenue for them to create efficiencies across all aspects of their operations.

Drenik: What is tech’s role in combating an SMB’s loss of revenue due to inflation?

Walsh: The Thryv Small Business Index saw indications of inflation’s impacts on small businesses in Q2 2022 that correlate to larger economic indicators like the GDP price index. The Thryv SMB-I saw a 1% decrease for the second quarter of 2022 year-over-year, where the GDP decreased .9% quarter-over-quarter. We’d have to say that Main Street is the canary in the coal mine when it comes to larger economic indicators. Small businesses lead the way for impacts that larger, more insulated companies may not feel as quickly.

We’ve heard from our software customers that utilizing technology has given them the ability to streamline their operational processes including managing the appointment booking process and follow-up outreach, estimating and invoicing, and payment processing the way a client wants to pay, to name a few. All of these things usually take a significant amount of time away from a business owner’s ability to service their customers.

Alternatively, hiring employees or third-party vendors to manage these processes can be reduced or eliminated based on easy-to-use technology solutions.

Technology has also given the ability to communicate and build better relationships with their customers. The use of features like email and SMS to effectively communicate with their prospects and customers enables them to reduce cancellations and no-shows which can cause businesses to expend and waste costly human and physical resources that are in short supply.

Drenik: What is the current state of digital transformation and cloud adoption by SMBs and what changes for them operationally once they take the plunge?

Walsh: We’ve seen large-scale enterprise organizations adopt technology and move to the cloud since the early 2010s. The 2020s will be the decade that small businesses take their operational efforts to the cloud. If we’ve learned anything from the last three years, it’s that businesses have to adopt nimble and adaptable practices for them to weather unexpected changes in the economy.

Drenik: How much time is actually used to manage the operations of running a business and if business owners are alleviated from these tasks, what can they apply their freed-up time and energy to instead?

Walsh: We’ve all seen the social media memes about quitting a 9-to-5 job to work 24 hours a day to follow your passion. The time varies depending on who you ask. One recent statistic we were able to glean from customers was that SMB owners are spending up to 10 hours a week on administrative tasks. A 2021 study said that it was 17 full days a year.

Drenik: The past few years have been crippling to many SMBs yet there was an entrepreneur explosion during the pandemic – have you seen a difference in the characteristics of business owners before and during the pandemic? 

Walsh: Some of that was pandemic-related, but this year it has been a result of the sky-high inflation and interest rates.

Pandemic-born businesses were a necessity for most owners to try to support themselves and their families, changing the most starting in 2020, more than any decade of this millennium. Some have seen workforce reductions as industries across the landscape are trying to ensure that they are meeting their guidance.

Regardless of pandemic or economic downturn, businesses created now are being launched by entrepreneurs that have used technology (from Gen-X to Gen Alpha) in their daily lives. As customers, they expect to engage with businesses that provide convenience through technology, and they want their businesses to have those same conveniences for their customers.

This article was written by Gary Drenik from Forbes and was legally licensed through the Industry Dive Content Marketplace and provided by ONEAFFINITI.