What adversities exist when starting a business in 2023, and how can you overcome these?
Starting a business is challenging at the best of times. Those beginning new ventures in 2023 must prepare to overcome various unique and continuing adversities.
During the pandemic, companies were forced to adapt to the new normal. Many initially hoped to see an upswing during 2022 and 2023 as difficulties faced over the last few years began to subside.
However, the reality has been a little different. Supply chains have not yet fully recovered, unemployment rates are rising, and inflation is set to remain above 2% for the rest of the year. In addition, worries about an inevitable recession are looming.
No one can say for certain whether a recession is coming, but the warning signs are evident. Unfortunately, small businesses are among the most vulnerable in times of crisis. But it’s not all bad news.
What are the challenges for SMBs and SMEs in 2023?
SMBs (small medium businesses) and SMEs (small medium enterprises) are essentially the same, though SMBs tend to be involved in services, while SMEs are primarily engaged in manufacturing industries.
Estimates suggest that around 60% of SMEs will fail within the first three years. Starting a company is never easy, and the obstacles are even more daunting during an economic crisis. But, of course, knowing what mistakes to avoid can help increase your company’s chance of survival.
While all small businesses are affected by financial issues, those working within the lifestyle, convenience, and entertainment industries will likely be the hardest hit. This is because people tend to stop spending money on these sectors first in times of economic hardship.
Despite some pessimistic predictions for this year, reports show that most small business owners remain optimistic about the coming year. And while experts acknowledge 2023 brings specific challenges, this has never stopped entrepreneurs from thriving before, and it won’t now.
The key is to prepare. SMBS must follow the lead of the most successful big businesses and invest in crisis management now.
Below, Jurg Widmer (small business advisor) has listed the most significant difficulties companies will face this year, as well as tips on overcoming them.
Difficulty acquiring and keeping staff
One of the biggest challenges small businesses face today is attracting and retaining staff. Despite unemployment rising, people have learnt from the recent pandemic that having a job doesn’t necessarily mean you’ll be able to keep that financial security when times are tough. Therefore, people need more incentives to take and stay at their jobs.
Workers want to have more control and flexibility. You can offer this by providing work-from-home opportunities, professional advancements, and rewards.
For example, it might seem contrary to the somewhat bleak economic outlook of 2023, but entertainment is back. Experts have pointed to building stronger relationships as one of the keys to survival. As such, consider how you can offer entertaining and connective opportunities within your budget. This approach can help businesses retain talented employees since people want to work in environments that appreciate and celebrate their contributions. Remember, keeping employees cost less than restarting the hiring process.
Rising prices could drive away customers
Many companies’ biggest financial challenge in 2023 will be rising prices, which may drive away customers. So your business will need to invest in your employees, new technologies and forecasting tools, and alternative marketing to reduce price hikes and keep customers.
Even when people reduce spending, many still want to support local businesses. So building relationships with your customers, especially local ones, will be key. One way to do this is to ensure regular communications, for instance, by making the most of email and SMS mailing lists.
Interestingly, one of the biggest worries for small businesses in 2023 is sustainability. Consumers, especially younger generations, are increasingly concerned with the environment and their impact on it. As such, new companies must factor in sustainability wherever relevant.
Of course, more sustainable practices have historically been more expensive to implement. Therefore, new small businesses need to be innovative in how they approach this issue to find ways to combine more long-term environmentally smart practices effectively. It’s important to highlight these practices since many consumers care about this topic.
A hybrid of at-home and in-office work lifestyles is becoming increasingly popular. This approach allows businesses to downsize or relocate offices to save money while allowing workers the freedom that many now desire.
Client and team meetings
The pandemic led to the rise of virtual meetings. Though these have worked well for companies offering digital solutions, those selling physical products have increasingly returned to in-person meetings.
In addition, loneliness has become a growing issue, particularly in Europe. Consider a mixture of virtual and physical meetings to combat these issues as suits your company.
While productivity is always a concern for small businesses, it is especially so during times of financial turbulence. As a result, experts are recommending rewards and innovative new technological solutions to help increase productivity. Given the rise in remote and hybrid work environments, the ability to adapt and embrace new technologies is more vital than ever.
Rising energy costs
Rising energy costs are putting pressure on the idea of remote work, which has become more popular for businesses and workers over the last couple of years. Many workers cannot afford to adequately heat their houses, especially if they are spending more time there due to working from home. This concern will decrease as we head into the summer months but is highly likely to gain relevance again towards the year’s end. Therefore, small businesses may need to offer more flexibility, allowing workers to choose whether to work from their homes or in the office.
Cybersecurity attacks on small businesses
Cyber attacks are a growing concern for most SMBs. You can better protect your data by working with vendors with proven security programs. It’s also crucial to prepare for people working from their own devices. Even if this is technically not allowed, it often happens. Preparing for this is more effective than altogether banning the practice. Experts recommend at least implementing network security, device monitoring and management, and personal data breach policies to deal with staff working from or using their own devices.
There are many potential adversities, and these often interlink. For example, concerns regarding staffing, remote work, and productivity can each be overcome with a more flexible approach, rewards, training opportunities, and adopting new technology and digital services.
The bright side is that small businesses are resilient and versatile enough to fight the challenges brought about in 2023. Times of turbulence can also be an opportunity to thrive for SMBs that are prepared and willing to take on the obstacles.