Covid-19 has had a major impact on businesses all over the world, accelerating a move away from cash and an increase in online spending. It has also changed the way companies operate, with many opting for global and remote workforces.
Pedro Pinto joined Neat as Head of Growth in July 2020 and is also the General Manager and Executive Director of Neat’s UK business. Pedro is responsible for Neat’s global growth strategies, including marketing and partnerships. Prior to Neat, Pedro was Head of Business Growth at Revolut. He has also held roles at Huddle, Box and Sophos, driving growth and product development.
Here he shares his thoughts on how Covid-19 has shaped small businesses.
When the pandemic first began, many small businesses were not set up to cope with the sudden lockdowns. Businesses had to quickly pivot to set up online shops if they were going to stay afloat during the pandemic or change their product offering completely.
According to Growth Intelligence, in the UK during the first four-month period after lockdown in 2020, there were 85,000 businesses that launched online stores or joined a marketplace which is no surprise given it has become easier than ever to start an online business with the likes of Shopify. And it is safe to say that e-commerce businesses are only set to grow. Looking at Hong Kong, according to Societe Generale the e-commerce penetration rate is set to hit 72.6% in 2022 in comparison to 59.8% in 2018.
If we look at consumers, the trend of shopping online will only continue to accelerate with many changing their habits and how they shop. According to the Office for National Statistics, the proportion in the UK that was spent online soared to 35.2% in January 2021, the highest on record.
With the move to online, small businesses have also had to make sure they are set up to take digital payments. The pandemic has been the driving force behind accelerating that digital transformation some businesses were not ready to make. Covid-19 has affected businesses around the world differently, but it has also led to an increased move away from cash. In Hong Kong, where pre-pandemic cash the main payment method, debit and credit cards took over as the most used payment method in 2020 according to a report by Visa.
The increase in the contactless payment limits along with Google, Apple, WeChat Pay and AliPay has also encouraged a move away from cash and has meant that many customers are choosing these payment methods out of convenience and ease over using cash.
Many businesses have also taken advantage of the pivot towards a work from home environment with many workforces going completely remote. For example, Hopin, an online events company is a completely remote-first company with their teams located around the world. There is no prerequisite for their employees to be located in a certain part of the world or to come into an office.
With this shift towards a global workforce, there are advantages of having more access to talent and much lower barriers to starting an international business. If we look specifically at Neat, Neat offers an incorporation service for businesses, which means SMEs can register their business in Hong Kong entirely online and remote. This has really helped small businesses that want to use Hong Kong as their base to access the Asia market but can’t actually get there at the moment.
With this shift, it also means that SMEs can manage their cashflow in a more efficient way with some small businesses saving on the typical company expenses such as rent for an office space. It has been even more crucial in this current situation for small businesses to be effectively managing their cashflow and balancing their books. However, there has also been the opportunity with selling online to reach a new audience and to market to the world as opposed to locally, creating a customer base that is global.
Small businesses are increasingly also not restrained by where they can produce their products. For example, many businesses are based in Hong Kong because of the easy access to mainland China which is where their supply chain could be located. This helps to diversify their product offerings and broaden their range of suppliers.
With habits increasingly changing and the world becoming more global it will be interesting to see where we are in 5 years time once the dust has settled and what impact Covid-19 has had on small businesses.
I will leave you with some questions that have played on my mind – Will we be living in a predominately cashless society? Will we only pay for items using our Apple or WeChat Pay? Will physical shops still be around or will all businesses move online?