The State of the Service Economy: A Beginners Guide to the Resilience and Growth of Small Service Businesses in 2023
A recent survey released by EverCommerce Inc. has revealed promising news for small service businesses in the United States and Canada. Despite the challenges posed by the pandemic, service SMBs are experiencing increases in demand, a positive sign of resilience and growth in the industry. In this comprehensive guide, we’ll delve into the key findings of the survey, the current state of service businesses, areas for improvement, and what the future holds for the industry.
Resilience and Recovery of Service SMBs
The 2023 State of the Service Economy report brought to light the remarkable resilience of small service businesses, with 69% of them reporting moderate to healthy recoveries from Covid-related anomalies. Despite the economic challenges, the service industry is proving to be healthy and growing, with an average increase in demand of 61% across field services, home improvement, and healthcare verticals. Field services businesses recorded the largest increase at 83%. It’s encouraging to note that only 32% of service merchants tightened inventory control, and 30% operated with fewer employees in 2023, indicating a positive trajectory for small and medium-sized service businesses.
Embracing Technology for Business Growth
Although small service businesses have shown remarkable resilience, there is still room for improvement, especially in the area of technology adoption. Larger service businesses have made significant investments in tech that automates their business functions. The survey revealed that while most businesses are satisfied with their current business software and level of customization, they feel limited in their ability to find new business tools. The integration of software for operations management, analytics and reporting, as well as payroll and employee scheduling, remains an area of interest for small service businesses.
Addressing Payment Solutions for Sustainable Growth
The survey also highlighted payment solutions as a problem area for small service businesses. While 57% of them want to increase the integration between their payment solutions and current software, only 26% have fully integrated payment solutions. Service merchants use checks, ACH/EFT transfers, and credit/debit cards as their primary payment solutions, with cash being more popular among smaller merchants. However, the demand for digital wallets and contactless payment options continues to grow, showcasing the evolving payment trends in the services industry.
Looking Ahead: The Future of the Services Industry
As service merchants look ahead to 2024, they are considering hiring more staff, exploring and switching business software solutions, seeking additional capital, identifying new supply chain options, and/or developing a website. Despite the economic uncertainty, very few service businesses expect to lay off staff or close their doors, indicating a strong future for the industry. As the service SMB sector continues to evolve, businesses that focus on offering diverse payment methods will generate increased purchase volume, transactions, and higher customer satisfaction.
In conclusion, the State of the Service Economy report paints a picture of resilience and growth for small service businesses. As the industry continues to recover from the challenges of the pandemic, it is essential for service SMBs to embrace technology, address payment solutions, and plan for future growth and adaptation. With the right strategies and a forward-thinking mindset, small service businesses are well-positioned for success in 2023 and beyond.