Small businesses must adapt to a constantly changing market. To meet customer needs and stay ahead of your competitors, it's important to monitor the trends that impact how your business operates, and there's no better time to reflect than at the start of a new year. To help you with this, we worked with experts in finance, marketing, technology and human resources to find out what to expect next year and how to set your small business up for success.
Trends in small business finance
Experts predict these trends will impact small business financing this year.
Alternative funding sources meet unmet funding needs.
For many business owners, a loan may not be an option, especially for businesses that have suffered significant financial losses during the turmoil of the past few years. In such cases, alternative sources of funding, such as alternative lenders and investors, may be essential to obtaining much-needed funding.
“Alternative sources of capital will probably also play a vital role in keeping the business solvent,” said Courtney Lawless, a venture capitalist and co-host of the Amazon Prime series. wolf pac. “Alternative funding sources include grants, fintech, venture capital, angel investors, peer-to-peer lending, and crowdfunding, to name a few.” These are important because they cannot meet the requirements of traditional funding sources.”
Private sources of finance are key to keeping businesses financed over the long term, especially as interest rates rise and access to finance becomes tighter.
Rising interest rates could cool the economy.
As part of its aggressive efforts to curb inflation, the Federal Reserve has raised interest rates four times in 2022. Inflation has started to fall, but rising interest rates are expected to continue until 2023, potentially cooling the economy and even pushing it into recession. . Rising interest rates make borrowing more expensive for businesses and their customers.
These additional costs can disincentivize small businesses from investing in growth or accessing financing, which exposes them to risks. In times like these, it makes sense for businesses to cut back on spending, and they can expect their customers to do the same. Federal Reserve Chairman Jerome Powell said he expects to cut interest rates in 2024, but that could change depending on inflation and other economic conditions.
Small business marketing trends
Experts predict that investments in social media, user-generated content, and entertainment will increase in 2023.
Spending on social media will increase.
With billions of cumulative users on major social media platforms, it's no surprise that social media targets are growing for marketers. This growth will continue into 2023, but will slow down slightly. Estimates from advertising agency Zenith Media predict that social media will increase from 55% to 57% of global advertising spending next year.
Social media advertising is becoming increasingly important, but so is competition. Small businesses should focus on a multichannel, organic approach to building their audience and brand awareness. Advertising may drive organic growth, but small businesses are using social media to communicate with their competitors when an organic approach like content marketing can have a better return on investment. should avoid getting caught up in an arms race.
Marketers leverage their best customers.
In uncertain market conditions, look for marketers who turn to their most devoted customers as a source of revenue. Marketers want to rely on existing customers who show signs of brand loyalty to grow sales and support their businesses against economic headwinds.
“A great and cost-effective way to identify and leverage your biggest brand advocates is through strategic UGC. [user generated content] ” said Zarnaz Arlia, Chief Marketing Officer at customer experience platform Emplifi. “Brands can maximize the value of UGC by promoting it through exciting offers, branded hashtags, contests, and even their own e-commerce websites.”
User-generated content is often cheaper than traditional marketing efforts and can yield impressive results. “Today's consumers want authenticity, and there's nothing more trustworthy than the voice of the customer,” says Arya.
Marketers try to entertain their customers.
As brick-and-mortar retailers struggle to win back customers, look for marketers to make shopping more exciting. “Consumers want to be inspired to buy,” said Golana Seely, vice president of global retail at ARHT Media.
For example, ARHT is betting that hologram displays will bring in a lot of foot traffic. Leveraging new technology to attract and delight potential customers will continue to be an effective way to capture their attention.
“We can beam celebrities and influencers directly into the sales floor to interact with consumers and showcase products in real time,” Seeley said.
Small business technology trends
Look out for the next technologies that will transform your business in 2023.
Generative AI disrupts business operations.
Generative artificial intelligence (AI) is the ability of software to generate text, music, images, and other creative works from short descriptions. Although this technology has only recently become mainstream, its impact on many functions across businesses is profound. Generative AI can create marketing materials, process customer support requests, and help design products.
As AI becomes the first widespread consumer phenomenon since voice assistants like Alexa and Siri, we can expect more people to immerse themselves in tools like ChatGPT and AI art generators.
Venture capitalists and large corporations are investing billions of dollars in generative AI. No one knows exactly what the impact will be. However, small businesses can expect to see an ever-increasing number of generative AI tools that are expected to revolutionize their operations.
Automation will become even more important.
AI-powered automation will work hand-in-hand with the tools that businesses already use to streamline various processes and functions. E-commerce CEO Ulf Bowart said logistics functions will pivot to automated functions, from warehouses to robotic delivery systems. “Automation allows retailers to streamline operations and maximize efficiency, while freeing up employee time to focus on more creative work,” he said.
Additionally, automation is expected to continue to play a role in creating more personalized recommendations for consumers. Automation allows businesses to understand their visitors based on their previous behavior, demographics, and other data, allowing them to create online interactions, recommendations, and offers that are most likely to appeal to a specific user. It will look like this.
Augmented reality and virtual reality will come into their own.
Augmented Reality (AR) and Virtual Reality (VR) have been in the zeitgeist for some time, but they are likely to be more widely adopted by businesses in 2023. Above all, small businesses are likely to be at the forefront of this trend.
“Virtual reality and augmented reality allow us to experience the world differently, and this is extremely powerful, especially during a pandemic,” says founder and CEO of B2B marketing company Ajax Union. said Joe Apfelbaum. “If you want to go to a networking event, you can go to the VR networking events that are happening right now. It's an affordable way to create a trade show exhibit that is a VR and AR experience.”
Small businesses should consider using AR and VR to stand out from the competition and create excitement for their audiences.
AI and big data drive personalization.
Other technologies that businesses cannot avoid are AI and data analytics. These two technologies are an ideal combination, allowing businesses to not only collect large amounts of data, but also use machine learning to understand that data. The insights companies gain in this way can be used for targeted marketing campaigns and to discover new efficiencies in internal processes.
“Thanks to big data, a high degree of personalization is possible today,” says Apfelbaum. “We can learn what our customers want in a predictable way, so we can use this to create custom user experiences.”
AI can do more than just contextualize business data, Apfelbaum says. “For example, this call is being transcribed by AI,” Apfelbaum said. “If I say 'action item,' it automatically runs the action item. If I say '$50,' it automatically creates a section for the amount we're mentioning.”
Getting started with AI is more affordable than you think. “Depending on what your business is and what you want to achieve, he can leverage AI and automation in a very affordable way,” Apfelbaum says. “He only needs to get one personal business license and he can use a lot of the tools that are out there.”
Small and medium-sized enterprises will accelerate the adoption of new technologies.
A common misconception about technology development is that it is the domain of large corporations. But Apfelbaum said the opposite is true.
“If you're a small business, you can implement new technology as soon as it comes out,” he says. “Large companies have to test and iterate over and over again, and by the time they have everything tested and set up, they have invested so much that they don't want to change it again.”
The ability to adapt to developing technologies will give small and medium-sized enterprises an advantage and will drive mass adoption of technologies such as AR, VR, and machine learning in 2023.
Developed technologies such as AR, VR, and AI will begin to be adopted by mainstream businesses and consumers. Small and medium-sized businesses will be critical in driving this mass adoption.
human resources
As demand for quality talent increases, employers will look to more ways to attract and retain talented employees in 2023. Pay attention to these trends.
Child allowances will become more common.
As companies still struggle to attract workers, more companies may offer childcare benefits to lure parents to fill vacant positions. For parents who have to work late shifts or long hours after school ends, ensuring their children are taken care of is a top priority. Companies that offer support to parents in securing and paying child support may be more likely to attract job applicants than those that don't.
“These benefits help employees feel supported and valued, leading to higher job satisfaction and retention,” said Jessica Chan, CEO of childcare network WeeCare. states.
There are many options, including search assistance, full or partial scholarships, and emergency backup care. Some companies offer on-site child care, so children can stay close to their parents while they work and easily pick them up when their parents are done.
Companies will reconsider sick leave to include mental health.
Occupational burnout is a problem for many employees, and productivity can suffer when top talent burns out. That's why many companies are choosing to prioritize mental health as part of their paid time off policies. This trend is expected to continue into the new year.
“There's definitely going to be a lot of talk about sick leave in 2023,” said Jamie Coakley, senior vice president of human resources at remote IT provider Electric.
According to Coakley, the need to take mental health into account is becoming more important due to the rise in remote and hybrid work. Many people now work from the comfort of their own homes, at least some of the time, and this arrangement makes it easier to work long hours without unplugging the power cord to take a break, increasing the risk of burnout. will increase.
“The traditional understanding of vacation doesn't really apply to the way we live today, with remote work becoming mainstream,” Coakley says.
Trends indicate the future of business
These are just a few of the many changes business is undergoing. With ongoing technological innovation and an unstable geopolitical climate, change and surprise are constant. But even in the most difficult of times, you can prepare for these changes and set your business up for success. Staying on top of trends like these and anticipating what they mean for your business can give you a competitive advantage.
