To effectively respond to a perpetually evolving market, small businesses must adjust. It is essential to observe the tendencies impacting your business operations in order to fulfill customer demands and maintain a competitive edge. The commencement of a new year presents an ideal opportunity for reflection.
In order to assist you, we reached out to professionals specializing in finance, marketing, technology, and human resources to discover what you can anticipate in the upcoming year and how to best position your small business for triumph.
1. Alternative sources of capital will fill unmet funding needs
In the event that businesses have experienced substantial financial loss in recent years, loans may not be a feasible solution for many business owners. Consequently, alternative funding sources like alternative lenders and investors become crucial for obtaining the necessary funding.
Courtney Lawless, a venture capitalist and co-host of the Amazon Prime series Wolf PAC, stated that alternative sources of capital are likely to have a significant impact in maintaining the financial stability of businesses. These alternative sources encompass grants, fintech, venture capital, angel investors, peer-to-peer lending, and crowdfunding, among others. The importance of these sources lies in the fact that numerous businesses in need of capital are unable to fulfill the criteria of conventional funding sources.
sources will be the key to keeping businesses funded in the long term, especially as interest rates rise and access to funding tightens.
2. Rising interest rates could cool the economy
In an attempt to control inflation, the Federal Reserve increased interest rates on four occasions in 2022. Although there has been a decline in inflation, it is anticipated that interest rates will continue to rise throughout 2023, potentially resulting in economic cooling and even a recession. The elevation of rates leads to increased borrowing costs for both businesses and their clientele.
The added expenses can deter small businesses from investing in growth, obtaining loans, and increasing their risk exposure.
Businesses and their customers may find it sensible to reduce their spending during periods like these. According to Federal Reserve Chair Jerome Powell, there is a possibility of lowering rates in 2024, although this could be subject to change based on inflation and other economic factors.
3. Social media spending will increase
Due to the massive number of users on popular social media platforms, it comes as no surprise that marketers have been increasingly targeting social media for advertising. The growth is projected to persist, albeit at a slightly slower pace, in 2023. According to Zenith Media, global ad spend on social media is expected to rise from 55% to 57% next year.
As social media advertising grows in significance, it also becomes more competitive. Therefore, small businesses should concentrate on employing a multichannel organic strategy to establish an audience and enhance brand awareness.
Small businesses should refrain from engaging in a social media competition with competitors, as organic strategies such as content marketing can yield a higher return on investment, despite the fact that advertisements can enhance organic growth.
4. Marketers will leverage their best customers
In the midst of unpredictable market conditions, marketers are expected to seek revenue from their most loyal customers. By depending on existing customers who demonstrate attachment to the brand, marketers will aim to boost sales in order to protect businesses from economic challenges.
According to Zarnaz Arlia, the chief marketing officer for Emplifi, utilizing strategic user generated content (UGC) is a highly effective and affordable method to recognize and benefit from your most loyal brand advocates. To increase the value of UGC, brands can endorse it through enticing deals, customized hashtags, competitions, and even incorporate it into their e-commerce website.
User-generated content can be more cost-effective compared to traditional marketing methods, and it can yield impressive outcomes. Arlia stated that modern consumers desire authenticity, and nothing can be more authentic than the voice of the customer.
5. Marketers will seek to entertain customers
As retailers in physical stores struggle to regain customers, expect marketers to enhance the shopping experience. According to Gorana Seeley, vice president of global retail for ARHT Media, there is a desire from consumers to feel inspired in order to make purchases.
ARHT is wagering that hologram displays will attract a significant number of people. Utilizing new technology to captivate and please potential customers will remain a successful method of grabbing their interest.
According to Seeley, it is possible to bring celebrities or influencers onto the sales floor and have them interact with consumers in real time, showcasing the products.
6. Automation will become more important
AI-powered automation will increasingly collaborate with existing business tools to streamline various processes and functions.
According to e-commerce CEO Wolfe Bowart, logistics operations will shift towards automated functions, such as warehouses and robotic delivery systems. Bowart stated that automation allows retailers to optimize their operations for utmost efficiency, while also allowing employees to prioritize more creative tasks by freeing up their time.
Automation will continue to be important in creating personalized recommendations for consumers. By analyzing previous actions, demographics, and other data, businesses can use automation to understand their visitors and tailor online interactions, recommendations, and offers to specific users.
7. Augmented reality and virtual reality will come into their own
Small businesses may take the lead in the widespread adoption of augmented reality (AR) and virtual reality (VR) by businesses in 2023.
According to Joe Apfelbaum, the founder and CEO of B2B marketing company Ajax Union, virtual and augmented reality provide us with the opportunity to perceive the world in a unique manner. This is particularly beneficial during a pandemic. Apfelbaum highlighted the significant potential of these technologies, stating that individuals can now attend VR networking events instead of physical ones. Additionally, they can easily create cost-effective virtual and augmented reality trade show displays.
8. The focus is on user reviews
When purchasing a new product, there are several steps involved. However, in recent times, users have begun to place greater emphasis on a singular aspect – the reviews. It is no longer solely about the features or price; it also involves considering what other individuals have to say about a specific product. Users find it more reassuring to buy something that has been experienced and tested by someone else.
According to Fan & Fuel, the absence of any reviews can cause 92% of individuals to hesitate in making a purchase. Hence, having online product reviews has become crucial for selling items. Even having a 4-star rating from numerous customers can significantly enhance the ease and attractiveness of the product to potential buyers.
It is important for small businesses to prioritize user reviews since they often have limited resources for marketing. When genuine individuals support your brand online, it enhances its credibility and can result in higher sales.
9. Mobile-first employee communication
At present, half of the workforce consists of millennials and it is expected that by 2025, they will make up 75% of the workforce. It is widely acknowledged that millennials are highly skilled in technology and prioritize mobility. Consequently, to ensure the concentration and involvement of your millennial teams, it is imperative to adjust your communication strategies to cater to their preference for mobile-first communication.
Outdated methods, such as emails, intranet, phone calls, or meetings where 73% of participants are not engaged, do not effectively disseminate your message to your employees.
To enhance employee communication, numerous businesses are transitioning to using communication apps. This shift enhances productivity, increases engagement, minimizes misunderstandings, and provides many other benefits. Employing a communication app grants managers and employees a direct and immediate means of communication.
With its robust communication features, Connecteam assists in streamlining communication, reducing unnecessary phone calls, and enhancing employee productivity.
- Surveys, Suggestion Box, and Live Polls: ensure every voice is heard through a suggestion box to gain feedback and make decisions based on organizational surveys and live-polls.
- Announcements, Newsletters, and Updates: communicate one-on-one, to a group, or the entire organization with rich and engaging content. Advanced features include pre-scheduled updates, social engagement support for likes and comments, share GIFs, videos, and memes, and automated follow-up capabilities.
- Employee Recognition and Acknowledgment: recognize star employees, share employee ‘spotlights’, and allow team members to nominate peers for awards. Boost engagement by celebrating and sharing birthday wishes, anniversaries, personal milestones, and organizational achievements.
- Employee Directory: all your team’s contact information is always available and easily searchable without needing to be saved on a personal device.
10. Gig work is growing too
Based on Gallup’s findings, approximately 36% of employees in the United States are engaged in the gig economy, which aligns with the increasing number of remote workers. The popularity of gig work stems from individuals seeking flexibility and the desire to have autonomy as their own managers.
Due to financial constraints, the majority of small businesses struggle to recruit and retain permanent employees, resulting in difficulties in finding and securing suitable talent. Consequently, gig work becomes pivotal in this scenario, as it allows businesses to hire individuals on a temporary basis, enabling remote work instead of requiring physical presence at the office.
11. Go green
There has been an increase in people opting for a green lifestyle, and Beyond Meat, a producer of plant-based proteins, has witnessed a substantial rise in its stock prices since its inception – more than tripled in value!
Companies of all sizes and types are now increasing their efforts to save energy, reduce carbon dioxide emissions, increase the use of sustainable materials, and improve packaging, in order to cater to consumers seeking an eco-conscious lifestyle beyond vegetarian diets and organic hygiene products.
According to Small Business Trends, merely being environmentally friendly is insufficient when trying to attract new customers in the green market. Providing consumers with specific information and demonstrating authenticity might hold the key. As a company, it is essential to ensure that customers comprehend the exact implications of opting for an eco-friendly option, both for the company and for themselves.
12. Employee happiness matters
Employee happiness is directly linked to their productivity levels and is crucial. They desire more than just a hefty salary or promotions; they seek to be content in their workplace, which entails feeling valued and knowing that their work significantly impacts the company’s success.
The way people work has shifted in recent times, with many offices now featuring foosball tables, vibrant walls, pet-friendly areas, open workspaces, and other similar amenities. These aspects are integral to the company’s culture, as the goal is to enhance morale and involvement, as well as retain valuable staff members and attract prospective employees.
13. Nonmonetary benefits and perks
According to Barbara Mason from Career Pathways Consulting, employees nowadays are no longer solely focused on money, but instead, they are looking for an experience rather than just a job.
Employees no longer find traditional compensation packages, such as 401(k) and bonus plans, as appealing as before. Nowadays, they seek additional incentives within their daily work routine, such as telecommuting, flexible working hours, paternity leave, and other motivators that prove to be more effective.
Companies should understand that although these perks may seem like additional benefits, there is a significant link between engaged employees and important business outcomes.
14. E-commerce is dominating
Statista has projected that the global e-commerce industry will achieve a value of approximately $5 trillion in the next four years. Consequently, a plethora of retailers are diverting their investments from physical retail stores to online platforms.
To beat the competition, it is crucial to utilize social media for increased sales and employ a state-of-the-art warehouse for expedited order delivery, among other aspects. These factors can greatly contribute to the success of your e-commerce.