Investments Your Small Business Should Make in the Pandemic

Introduction

The COVID-19 pandemic, which began in 2020, continues to impact small businesses in 2025, with challenges like supply chain disruptions, labor shortages, and shifting consumer behaviors persisting. Despite these hurdles, strategic investments can enhance resilience, drive growth, and position small businesses for long-term success. With 71% of small businesses creating net new jobs since 2019 and a record 4.4 million new business applications in 2020, per the U.S. Bureau of Labor Statistics, investing wisely is critical. This article outlines key investments small businesses should prioritize in 2025 to navigate the ongoing effects of the pandemic, based on lessons from 2020–2024 and current economic trends.

Why Strategic Investments Matter

Investing during a pandemic may seem counterintuitive, but targeted investments can mitigate risks, boost competitiveness, and capitalize on emerging opportunities. Small businesses that adapted during the early pandemic—such as those pivoting to e-commerce or remote work—saw a 20% higher survival rate, per McKinsey. Strategic investments help businesses address immediate challenges like reduced cash flow (average 20–27 days of reserves) while preparing for a post-pandemic recovery where 70% of owners expect revenue growth, per the U.S. Chamber of Commerce.

Key Investments for Small Businesses in 2025

1. Digital Transformation and E-Commerce

• Why It Matters: The pandemic accelerated the shift to online shopping, with nonstore retail accounting for one-third of new businesses formed during 2020. In 2025, 80% of consumers prefer businesses with robust online presences, per Salesforce.

• Investment Areas:

  • Build or upgrade a business website using platforms like Wix or Shopify ($200–$5,000 startup cost).

  • Invest in e-commerce tools for inventory management and payment processing (e.g., Square, $50–$500/month).

  • Enhance digital marketing via social media ads or SEO tools like SEMrush ($120–$450/month).

• Benefits:

  • Increases revenue by 15–25% through expanded market reach.

  • Reduces reliance on physical storefronts, saving 10–20% on overhead.

• Example: A Maine furniture store pivoted to direct-to-consumer e-commerce during the pandemic, boosting sales by 30%.

• Tip: Start with low-cost platforms like Canva for branding and integrate Google Shopping for seamless sales.

2. Artificial Intelligence (AI) and Automation

• Why It Matters: AI adoption among small businesses surged in 2025, with 75% investing in AI tools, leading to a 91% revenue boost and 90% operational efficiency gains, per Salesforce.

• Investment Areas:

  • Implement AI-powered CRMs like Salesforce Starter Suite ($25–$100/month) to automate lead tracking and customer follow-ups.

  • Use AI chatbots (e.g., Tidio, $20–$50/month) for 24/7 customer service.

  • Adopt AI analytics for consumer behavior insights (e.g., HubSpot, $50–$800/month).

• Benefits:

  • Saves 10–20 hours weekly on routine tasks, allowing focus on strategic goals.

  • Levels the playing field, enabling small businesses to compete with larger firms.

• Example: A small retailer used AI to automate email campaigns, increasing customer retention by 15%.

• Tip: Start with affordable AI tools and ensure customer data is centralized in a CRM for maximum impact.

3. Remote Work and Flexible Work Infrastructure

• Why It Matters: Remote work became a norm during the pandemic, with 36% of employees working from home in 2020, per the UK’s Decision Maker Panel. In 2025, flexible work arrangements attract talent and reduce costs.

• Investment Areas:

  • Invest in collaboration tools like Zoom or Microsoft Teams ($10–$20/user/month).

  • Provide cloud-based software for project management (e.g., Asana, $11–$25/user/month).

  • Upgrade cybersecurity with VPNs and antivirus software (e.g., NordVPN, $3–$12/month).

• Benefits:

  • Cuts office-related costs by 15–30% and boosts employee retention by 20%.

  • Attracts talent, as 60% of workers prioritize flexibility, per LinkedIn.

• Example: A UK small business adopted remote work tools, reducing office lease costs by 25% while maintaining productivity.

• Tip: Train employees on tools and establish clear remote work policies to ensure efficiency.

4. Employee Training and Talent Retention

• Why It Matters: The pandemic shifted labor market dynamics, with small businesses needing to invest in training to retain talent and adapt to new demands. Hiring the right people during crises boosts startup success, per Small Business Charter.

• Investment Areas:

  • Offer online training programs (e.g., Coursera, $30–$100/course) for skills like digital marketing or CRM use.

  • Implement mentorship programs or team-building activities ($0–$2,000 annually).

  • Provide competitive benefits like health insurance or flexible hours ($500–$5,000/employee/year).

• Benefits:

  • Reduces turnover by 25%, saving $10,000–$50,000 per employee in rehiring costs.

  • Enhances productivity, with trained teams achieving 15% higher output.

• Example: A small consulting firm trained staff in AI tools, improving client project delivery by 20%.

• Tip: Focus training on skills aligned with business goals, such as e-commerce or customer service.

5. Financial Resilience and Liquidity

• Why It Matters: With only 20–27 days of cash reserves for most small businesses, per JPMorgan Chase Institute, financial buffers are critical for survival.

• Investment Areas:

  • Build an emergency fund (aim for 3–6 months of operating costs, $5,000–$50,000).

  • Explore low-cost financing like crowdfunding (e.g., Kickstarter, $500–$5,000 in fees) or microloans (e.g., Kabbage, 1–6% monthly interest).

  • Work with an accountant to optimize cash flow ($100–$500/month).

• Benefits:

  • Extends runway during disruptions, with 47% of businesses surviving longer with aid, per PNAS.

  • Enables investment in growth areas like e-commerce or AI.

• Example: A dance studio secured a PPP loan and renegotiated rent, maintaining operations during lockdowns.

• Tip: Renegotiate contracts with vendors or landlords to defer payments and preserve cash.

Benefits of These Investments

• Increased Resilience: Digital and financial investments help businesses survive prolonged crises, with 47% expecting to stay open after four months of disruption.

• Revenue Growth: E-commerce and AI tools drive 15–91% revenue increases by reaching new markets and automating tasks.

• Cost Savings: Remote work and automation reduce overhead by 15–30%.

• Competitive Advantage: Businesses that adapt to consumer trends (e.g., e-commerce, sustainability) see 20% higher customer retention.

• Job Creation: Investments in training and infrastructure support the 71% of new jobs created by small businesses since 2019.

Challenges and Considerations

• Limited Budgets: 52% of small businesses started with less than $10,000, requiring low-cost solutions like Wix or Canva.

• Uncertainty: High uncertainty, as noted by Papanikolaou and Schmidt (2020), can deter investment; focus on flexible, scalable solutions.

• Skill Gaps: Lack of digital expertise may require training or hiring, adding short-term costs.

• Regulatory Risks: Ensure compliance with data privacy laws (e.g., GDPR) when adopting AI or e-commerce tools.

Real-World Examples

• Retail Pivot: A clothing boutique invested $2,000 in Shopify and social media ads, increasing online sales by 40% during lockdowns.

• Service Adaptation: A cleaning company adopted AI scheduling tools, boosting demand for sanitization services by 25%.

• Financial Strategy: A restaurant used a $50,000 microloan to upgrade to contactless delivery, retaining 80% of its customer base.

Conclusion

In 2025, small businesses navigating the ongoing effects of the pandemic must invest strategically to thrive. Prioritizing digital transformation, AI and automation, remote work infrastructure, employee training, and financial resilience ensures adaptability and growth. These investments, supported by tools like Salesforce, Shopify, and micro-financing, enable businesses to meet evolving consumer needs, reduce costs, and build resilience. By acting proactively, small businesses can turn challenges into opportunities, contributing to the 70% expecting revenue growth and sustaining their vital role in the economy. For tailored financial advice, consult an accountant or advisor, as recommended by Canada Life.