Sunday, April 14, 2024

Small Business Trends for 2023: Challenges and Predictions

Let’s not sugar coat it.

The past few years were some of the most arduous and tenacious time’s small businesses had to traverse. From the Covid-19 pandemic which created severe financial hardship and forced closures, to an unstable economy – small businesses have suffered the most.

A Quick Flashback

According to a survey by the Proceeding of the national Academy of Sciences of the USA (PNAS), up to 43% of small businesses had temporarily closed during Covid. In other countries such as Australia, 72% of small businesses were concerned about survivability.

Majority were facing a financial crisis and around three quarters of businesses only had enough cash flow to survive for approximately two weeks.

But sometimes it’s just one thing after the other. Just as the pandemic regulations eased and small businesses were expecting breathing room, inflation came in as another curve ball.

Now with inflation in the equation and a possible recession, here are the biggest trends, challenges and predictions for small businesses in 2023.

The Challenges

The good news is that most of the troubles for small businesses are now behind them. While inflation is still an economic battle and capital discipline must be maintained, the overall outlook is exceedingly positive when compared to recent years.

That’s not to say there aren’t challenges.

Maintain your Team and Customers

There is a lot of data to suggest that small businesses are hiring at a marginally slower rate than larger corporations. While this may feel like a given, it shows that smaller businesses are struggling to obtain top talent and have concerns of retaining their current staff.

Another trickledown effect of inflation is maintaining customers and identifying how to not lose any. Small businesses have to increase the price tag of their products and services to survive, albeit naturally consumers are likely to distance themselves from anything too pricey, unless your business is willing to pick up the inflation tab.

This challenge is exacerbated with the number of options consumers are now exposed to. When you’re presented with unlimited options, the reasons for someone to choose your business in an unstable economy is slim, competition is tough as always.

The Need for Technology

Everyone has experienced the liberation that comes with flexible work, and they now desire to choose their own workspace. Undoubtedly, flexible work has many benefits for workers but small businesses are struggling to keep up.

Small businesses usually lack the resources or technological infrastructure that larger organizations have. Technology such as cloud solutions, data storage solutions, analytics and automation from artificial intelligence are all integral for optimized flexible work, but what happens when you lack this?

Flexible work’s biggest risk without the necessary technology is cybersecurity. There has been enough data breaches and ransom software to remind us of the importance of a secure network.

At the same time, businesses that don’t offer flexible working will struggle to hire new talent and may miss out. As a result, it’s essential that small businesses invest in the right technology when they can.

Predictions

With challenges come opportunities and small businesses should have an optimistic view on 2023.

Customer Focused

Small businesses need to become more customer-oriented than in the past if they are to survive and thrive in 2023. This means having a solid understanding of their customers, their needs, and what drives them to purchase from a particular business. It also means investing in solutions that can help small businesses better understand their customers and create personalized experiences.

As mentioned earlier, with small businesses needing to increase their price tags and consumers having a plethora of options, understanding your customers will make a difference.

Digitize Payment

The adoption of digital payment methods will have to speed up if small businesses are to remain competitive in the current economy. In 2023, cashless payments and contactless payments, such as QR code readers or NFC-enabled smartphones, will need to be implemented by all small businesses.

There are still many businesses which only accept cash and don’t have the option to pay by card, this limits your customer base.

Consumers want hyper convenience and recognizing all of their preferences including payment is key.

Keeping a Tight Hand

The prior years weren’t kind on anyone’s pockets.

According to Xero, small businesses in UK, Australia and New Zealand will endure negative cash flow between four months to a year. If you’re part of that demographic, take this as reassurance that itu2019s normal.

Although a recession isn’t certain, it’s best for small businesses to stay extra mindful of their cash flow and debts. Owners which are considering a loan should opt for a fixed-interest rate in case of a recession, but if getting a loan during a recession ensure it has a variable-interest rate.

All small business owners will be finding methods to reduce expenses and maximize their current assets. Business expenses have increased, consequently budgets and profitability margins need to be adjusted.

Although the initial investment of technology can feel costly, the upgrade in operational efficiency will recoup the costs overtime. Small businesses will need to identify what drives the most profit and strongly narrow down their efforts towards the highest performing products to stay

Sustainability Remains a Priority

Being conscious of your impact on the Earth is a trend thatu2019s raised every year.

It feels wrong to call this a trend, as it classifies as a priority, but for the interest of small businesses it is a trend to embrace. With the U.N. including climate action as part of its 2030 sustainable development goals, businesses are expected to do their part regardless of size.

Consumers are now hyper aware of eco-friendly practices and expect businesses to implement them, especially when it comes to packaging.

When looking at product options, consumers will prioritize businesses with sustainable processes in place and understanding how to reduce your carbon emissions shouldn’t be overlooked, it should align with your business goals.

Quiet Quitting is Still Around

We’re tired of hearing about the Great Resignation but it’s still around and businesses are heavily affected by it.

There will be an employee showing no signs of being dissatisfied with their job, yet one day their manager receives a resignation. While this links with the challenge stated earlier, it’s a trend that is likely to continue as the job market remains heavily saturated.

To avoid falling victim to quiet quitting, it’s paramount for business owners to frequently catch up with their employees and gauge how they feel. Large corporations will find this difficult but for small businesses it’s manageable.

Automation

Small businesses are likely to lean down their operations to remain profitable and incorporate AI to make up for reduced staff. Automation is a significant investment and businesses of all sizes are searching to see how they can maximize their operations at a lower cost.

Now with Chat GPT in the equation, businesses have a free of cost avenue to explore how automation can be implemented. Albeit new, AI based search engines are undoubtedly the future and their current functionalities are still worthy of attention as working with them while they develop is the best method in being trained on how to use them.

People generally associate the word ‘automation’, with job loss and consequently they avoid it to ensure their employees don’t get concerned. But in this scenario it refers to speeding up tasks and assist employees in becoming more efficient with their workload.

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Arsen Armstrong

Arsen Armstrong

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