Do small business owners expect a better, or worse 2023? These are the top trends heading for 2023.
With a tumultuous 2022 behind us, many small and medium-sized business owners are wondering just what lies ahead in 2023. Will 2023 be worse or better than 2022? At this point, it is anyone’s guess. However, we do have an idea of what is of concern to many of the small business owners that we work with. As a company working with many small business owners at any given time, we can speak of what has been expressed to us about the top trends for small business owners heading into 2023.
Top trends for 2023
The last year has been very challenging for the small business owners we have spoken with. In the past year, small business owners have dealt with shutdowns from COVID-19, inflation, challenges finding qualified employees, increasing regulation, technology, and so on.
When asked about top trends heading into 2023, many of these same business owners said that these were the same trends of concern to them heading into the New Year. While there are many factors that can influence the growth and success of small and medium-sized businesses, the trends that have the attention of the small business owners we have spoken with include:
Earlier this year, businesses and consumers alike were hit hard with inflation. As we head into 2023, an economic downturn is likely in the cards. With the labor market and consumer spending holding firm as of this writing, things are lining up for a mild recession in 2023. Keep in mind that this outcome rides heavily on the accuracy of the underlying data. Regardless of what takes place, businesses should be preparing for what lies ahead.
This starts with managing the risk under your control and retaining a flexible cost structure and business model.
- Review your connections with your suppliers. Think about renegotiating agreements and prices. By contracting with a vendor to handle some tasks, you might also see increased efficiency.
- Plan ahead for a decline in sales and profitability. Concentrate methods on your biggest and most significant clients, partners, and investors, and fortify bonds with them. Be open and honest about these adjustments even though price increases might be necessary.
Additionally, search for business opportunities. A downturn may have benefits like these:
- M&A opportunities. Utilize equity market premiums on valuation for size, expansion, and high profit M&A opportunities.
- Watch out for assets that are being undervalued. Opportunities may also be presented by low equity prices.
Embracing Digital Technologies
During the epidemic, companies embracing digital technologies surged. This trend is expected to continue. The future success of small and medium-sized businesses (SMBs) and mid-market companies depends on digital transformation and the implementation of automated, digital technology. Companies may realize increasing efficiencies, freed up resources, and embrace value-generating activities more efficiently through digitalization (converting analog information to digital), all while raising consumer and employee satisfaction rates.
Digitization has not been a top priority for many SMBs and mid-sized businesses, while being a necessary step in the digital revolution. Instead of manufacturing and service delivery, digital initiatives have primarily focused on improving products and services.
When implementing digital transformation plans, smaller enterprises do have some benefits over larger ones. SMBs and mid-sized companies, for instance, are typically more flexible and agile when it comes to gathering and integrating data sources for business insights and enhanced workflows. Collaboration and information exchange can go much more smoothly. On the other hand, segregated departments and stove-piped processes can slow down large corporations.
Talent Acquisition and Retention
COVID permanently changed the employer-employee relationship. It showed that for many industries, businesses, and employees, the ‘work-from-home’ model works. Many employees demonstrated that they could continue being productive while working from home, with little supervision. For employers, it gave them the opportunity to attract the best employees, while minimizing their overhead.
A secondary consequence was that many employees opted to pursue new opportunities, or not work at all, creating a shortage of qualified employees.
In 2023, it is expected that it will still be difficult to find and keep talented workers, a problem that will only get worse if the Great Resignation continues.
This is particularly difficult for small businesses because hiring and training come with significant costs. Engaging with staff and encouraging them to stick around will therefore be a priority.
With smaller budgets than larger firms, SMBs and mid-sized companies will need to explore ways outside typical incentives to attract talent. These include perks like career advancement possibilities, work-life balance, health and wellbeing, mentoring, and a flexible, hybrid work environment.
Keep in touch with your best workers during a recession to learn about their perspectives, issues at home and at work, and mindset. You can fight any offer they receive should they decide to leave by anticipating their worries before they become a problem.
Increasing focus on sustainability, social responsibility, and Net Zero
Companies will need to comprehend their impact on the supply chain and scope 3 carbon emissions because of the growing tendency towards climate action and climate-related disclosures. According to the Environmental Protection Agency (EPA), “Scope 3 emissions are the outcome of actions from assets not owned or controlled by the reporting business, but that the organization indirectly impacts in its value chain.”
Governments also place a high premium on achieving Net Zero, the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere. The United States has made a commitment to achieve net zero emissions of greenhouse gases by 2050.
In preparation, the Securities and Exchange Commission (SEC) is completing the requirements for climate-related disclosure in annual reports, registration statements, and prospectuses of all publicly traded businesses that have filed reports with the SEC or whose stock is traded on a U.S. stock exchange.
Aside from rules and requirements, experts say that businesses implementing net zero initiatives can aid firms in cost reduction, expansion, and resilience. Think about the following:
- Go circular with your economy. Use low-carbon techniques to enable the effective use of resources and energy. By extending the lifespan of resources and products, a circular economy can reduce or even eliminate waste.
- Construct a sustainable supply chain. Additionally, a net zero strategy lowers waste and emissions for organizations, keeps them from wasting resources, and protects their brand from supply chain hazards (ex. use of child labor).
An increasing and evolving regulatory landscape
Small and mid-size businesses have been impacted by annual revisions and changes to state and federal rules and regulations. The same should apply in 2023. Some of these modifications are already well known. In order to deal with the effects on their enterprises, further regulations that will be implemented in 2023 will necessitate swift decisions from the owners and managers of these businesses.
Digital asset laws.
Nowadays, a growing number of small and medium-sized enterprises use cryptocurrencies in their transactions and have access to digital assets that might be pledged as collateral for loans. To address concerns relating to digital transactions and make it easier for security interests in digital assets to be perfected, states are anticipated to start revising their state commercial (UCC) laws.
Personal data laws.
Numerous companies gather personal information. They must be ready to abide by stringent updates to California’s data privacy legislation as well as new state consumer privacy regulations that will take effect in Connecticut, Colorado, Utah, and Virginia in 2023. It’s possible that additional states will approve data privacy legislation.
Concerns about the environment, society, governance/diversity, equity, and inclusion.
The legislators of numerous states are interested in the topics of ESG and DEI. For instance, several governments have passed or proposed legislation promoting or discouraging state pension funds from making investments in socially conscious businesses. Several states have also enacted legislation to address the lack of diversity on corporate boards. It’s worth keeping an eye on to see whether any states address diversity in private enterprises, even though they have often only applied to publicly traded companies.
Wrapping up top trends for 2023 for small business owners
By this time next year, we should have a clear picture as to just how these top trends for 2023 play out. These trends represent both challenges and opportunities for small business owners, both of which often require capital to implement. Zip Capital Group can help as we are small business funding experts providing working capital, merchant cash advances, and capital for new equipment purchases.
Contact us, or call us today at (800) 795-3919 today to discuss your small business funding needs.