Adjusting to new ways of reaching potential customers
With the impossibility of attending and organizing in-presence corporate events like trade exhibitions, workshops, and conferences, companies had to come up with new ways of meeting potential customers.
Indeed, the “Global State of Small Business Report April 2021” (2) a collaboration between Facebook, the OECD, and the World Bank, indicates how the most common change made by SMEs since the start of the pandemic has affected interaction with customers.
“Our company used to organize workshops as a way to introduce itself to new clients and, thus, to sell consultancy projects,” says Ms. Giuliano. “With all the travel and gathering restrictions, we now have to meet customers on a one-to-one basis, using virtual conferencing platforms”.
Several important trade shows which couldn’t take place in 2020 and 2021 have come up with virtual shows. This is the case for Hannover Messe, one of the largest exhibitions for the manufacturing sector. "The past few months have shown that digital formats cannot replace a real trade fair," said Dr. Jochen Köckler, CEO of Deutsche Messe AG. “In 2022, sanitary conditions allowing the trade show will return to a physical format, but complemented with innovative digital opportunities for involvement.” (3)
While physical presence cannot be a substitute for the whole marketing and sales process, especially in some sectors, online advertising can offer interesting opportunities to SMEs. Indeed, presence on search engines, if well structured, allows companies to reach a potential customer base of millions.
The Call: Government should help companies embrace the digital transformation
Governments should improve digital infrastructures, in order to reach all businesses even in remote areas. This allows users at every step of the value chain (suppliers and customers) to easily interconnect with each other. Incentives should be addressed by companies to enhance their IT infrastructures and to train employees for the new digital environment. Particular effort must be done to increase companies’ attention to cybersecurity.
Adjusting to a new workplace setting
Remote work has not only changed interaction with customers and suppliers but has also changed working with colleagues.
There are both pros and cons of working from home. First, less time is devoted to commuting. “Malta is a small island,” says Ms. Giuliano. “But, we have traffic too.” Saving on the number of hours spent commuting, which are often unproductive, can actually lead to an increase in productivity. This has been the case for some companies, like Across Limits.
Research on this point is, however, controversial. In a recent study conducted by McKinsey, (4) which analyzed the potential for remote work in a range of countries, it was concluded that although some tasks can be done remotely in a crisis, they are much more effectively done in person. These are activities that entail advice and feedback, or those that benefit from collaboration.
Hybrid models of remote and in-presence working are likely to emerge. Ms. Giuliano herself, is thinking of asking her employees to report for office work at least for two days a week, since “a couple of days of physical meeting is required to align on common projects”.
The Call: Government’s policies should aim at making work from home sustainable in the long run
It is clear that hybrid forms of working will remain indefinitely considering both in-office and work-at-home conditions. For smaller companies, this might mean a very demanding change in their logistics and their working arrangements. Government policies should be aimed at assisting companies in their reorganization process, especially for smaller companies who are transforming remote working into an opportunity for all.
Accessing to finance and diversification of SME financing instruments
One major issue during the pandemic was related to the liquidity shortages caused by the sudden drop in revenues.
While access to banking finance instruments remained relatively easy for SMEs, thanks to robust governments’ measures, OECD findings (5) indicate a tightening of alternative sources of finance, particularly on early stage equity financing.
Risk aversion increases in times of crisis, as Ms. Giuliano, a business angel herself notes. In anticipation of potential losses, investors might decide to wait for better times.
The Call: Public policies should aim at supporting the recent trend of SMEs diversification of financing sources
Governments should support the market for alternative sources of financing for companies (venture capital, online financing, and factoring, business angels, etc. through a mix of fiscal policy, government-backed guarantees, and regulatory initiatives).
Since the start of the pandemic, small companies had to face a changing business environment. Regardless of the actual impact on their balance sheet, companies have faced new working conditions in every aspect of their company life. While being smaller might entail greater flexibility and capacity of adapting, public policy should be aimed at helping SMEs to adapt to the new business paradigm.
Written by Giulia Silva who holds a graduate degree from Bocconi University. She is currently working as an Economic Affairs Officer at Confindustria Piacenza.
Edited by Grace Ann Marciano