What are local business owners thinking about market conditions in 2021? Borrell Associates surveyed its monthly panel of SMBs, the local merchants and service providers that form the sales backbone for U.S. radio. Their answers may surprise you. Equal percentages of them are struggling as are adapting or thriving. And more expect to increase their marketing efforts than decrease them this year.
Among those who plan to spend more, the average increase is 35%. But the data shows adapting to the pandemic hasn’t occurred evenly. Compared to March 2020, when the pandemic began to form a tight grip on the country, 44% of participants said they are now adapting or thriving while 43% are struggling or slow to adapt.
This tale of two cities is personified in comments from survey panelists. “My company is a replacement residential window and door company, and we are busier than ever but lead times have risen to 12-16 weeks from 3-4 weeks,” wrote one panelist.
But on the other side of the recovery tracks, “Our business is a museum,” said another panelist. “We rely on large groups of visitors on tours, large-scale public events, which will be among the last restrictions to be lifted.”
Local businesses drastically cut back – or outright canceled – advertising during the “trough” of the pandemic. But by year-end 2020, when the Borrell survey was conducted, two-thirds said they expect to spend the same or more in 2021. That breaks down to 36% who indicated they will spend about the same in 2021 as in 2020 and 30% who plan to spend more.How much more? The average is an encouraging 35% spending increase. But 25% said they anticipated spending less in 2021 than in 2020 with an average decrease of 43%.
When compared with a year ago, much of that money will be held in abeyance until conditions improve. For example, in December 2019, 49% had already begun placing buys for the coming year. In December 2020, only one-third had done so. Similarly, only 32% last year said they had planned buys but purchased nothing while 42% indicated that is the case this year.
The consensus among the SMBs that took the survey is that things will begin to turn around for businesses in June.
The survey turned up lots of flexibility as businesses head into the New Year. More than three in four SMB (77%) say their plans are more flexible than firm for Q1 while 18% say their plans are more firm than flexible.
Heading into a year full of both promise and uncertainty, small businesses aren’t just being flexible – they’re downright hesitant. Nearly four in ten (38%) are looking at short term media placements only and another 29% have a wait-and-see approach of taking no action and making no plans. Conversely 22% are moving forward with long-term buys and will change them if needed later.
Signaling that much business remains up for grabs, 45% of respondents say they are uncommitted when it comes to marketing partners. To get their business, you’ll need to use superlative communication, foster a long-term relationship and deliver results. Those are the three things that impress survey participants most about a partner.
And in a note of caution, the Borrell monthly survey of SMBs concludes that hiking the price by 20% or more harkens the ax. It’s the top reason, by far, a local business would end the relationship. Weak customer support ranks second.
The Borrell Small & Medium Business Panel survey was conducted from Dec. 21-30, 2020.