SMBs Feeling Uncertain Over Succession

Which characteristics will best guide small businesses through the current crisis? And conversely, which ones signal the likelihood of failure? These have become popular questions to speculate on during the pandemic.

One thesis is SMBs that have modernized their operations with technology will survive at a higher rate than those that do not. The argument is that these “tech-first” SMBs will be more efficient and better able to run their business on a lean crew. And they will more easily adapt to eCommerce, curbside pickup, and other processes enabled by technology.

We believe there is something to this thesis, but it’s just too early to tell. The lockdowns are just ending, after all. It will be a while before we have data that shows us what factors characterized which businesses survived the crisis.

The Generational Tech Divide

Inevitably the conversation about SMB tech adoption veers into a conversation about generations. Specifically the shift from older to younger business owners that was underway before the pandemic hit.

We know from multiple waves of Localogy’s Modern Commerce Monitor™ tracking study that older business owners are less inclined to adopt SaaS to operate their businesses. For example, in Wave V-I, GenZ business decision-makers over-index for SaaS adoption (121), while Baby Boomers under-index (90).

We ran MCM Wave V in early 2020, before the lockdowns. We ran a supplemental wave (V-II) in April to ask new questions emerging from the pandemic (for example, related to remote work) and to run some comparisons to SMB attitudes on the eve of the pandemic.

One thing we were curious about was how the lockdowns have changed how business decision-makers over 55 were thinking about succession.

For starters, we found that a staggering 74% said the pandemic has impacted their plans in some way.

More than anything the pandemic has introduced uncertainty. There was a 53% rise from waves V-I to V-II in business owners who said “I don’t know” when asked about retirement plans. This is easy to understand in this environment.

It appears that older business owners are more likely than before to put succession planning on hold. This means more will continue running their businesses beyond the crisis than had originally planned. This assumes the crisis doesn’t drive them out of business.

Agency Perspectives: Generation Argument “Overplayed”

We’ve been having a series of conversations with leaders in the digital agency community about a range of pressing issues. Some of these are immediate, as in how to respond to the COVID crisis. Others involve longer-term questions like adapting to increasing automation in digital advertising.

We asked our subjects about the generational SaaS divide. Specifically, we wanted to know if agencies are seeing any evidence of higher attrition rates among businesses that are less digitally prepared. These are more likely to be businesses with decision-makers approaching retirement age. We heard some interesting perspectives along the way.

Signpost VP of Marketing Laura Nelson believes cash flow is the biggest factor in determining success or failure. At least in the early days of the crisis.

However, she adds that the crisis has led many businesses to deploy technology in new and compelling ways. This includes everything from online scheduling to creating and distributing new content on social media to handling job estimation remotely. Signpost works predominately with SMBs in the home services vertical.

She acknowledges generational shift is a big part of the long-term picture. But she also said it is “too early to say” if the crisis will accelerate the transition.

“The transfer of ownership across generations in huge,” Laura said. “And technology adoption is often picked up at that point of transfer.”

Laura Nelson: “Digital Technology Has Broken into their Processes”


Tidings founder David Mihm questions whether older business owners are less well equipped to compete. He does think now is the time for business owners to embrace technology or let someone else run the show. He just thinks defining this transition purely in generational terms is “overplayed.”

David cites one example to support this view. A therapist friend who is over 70 and not particularly interested in technology. She quickly and seamlessly embraced online service delivery. And now her practice is thriving.

“You are probably going to see businesses start to ask about technological solutions for things they used to do offline,” David said. “That will accelerate regardless of generation.”

David Mihm: “The Generational Thing is a Little Overplayed”
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Will Coronavirus Hasten the Generational Shift Among SMBs?

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