How Small Businesses Will Loom Large this Year
This is an article “How Small Businesses Will Loom Large this Year” by Marc Primo
The world of corporate blue chips is currently undergoing a crisis. With the Great Resignation of 2021 seeing an exodus of an estimated 33 million US employees from their desk jobs, many foresee a boom in startups and small businesses on the rise soon. In fact, one study projects the emergence of 17 million new small businesses in this record year of 2022. At the rate global trade is going, new companies now stand a chance to go from zero to 100 blazingly fast, but not all of them seem prepared for the speed bumps ahead.
If you think that COVID-19 gave us a lightbulb moment about how we want to work, you're probably right. With most companies resorting to salary cutbacks, the furloughing of employees, and work-from-home arrangements, many epiphanies were realized – realizations that were not going for the side of big companies. 83% of 8,000 surveyed US employees said they are now ready to jump-start their own businesses. Thanks to the convenience that modern tech and eCommerce now offer aspiring entrepreneurs, it's not that hard to fathom.
So, the big question remains: are small businesses ready to be the impulsive game changers that they are in today's economy?
Let's look at the facts:
How will small businesses fare in today's business climate?
Small businesses with less than $50,000 in their initial capital continue to grow and offer new employment opportunities. These figures are significant for the country's economy as it contributes $5 trillion or 44% to its gross domestic product (GDP). With more sole proprietorships emerging, experts projected a record 5.3 million new businesses hiring more workers in 2021.
However, the bigger challenge rests on acquiring new talents considering that many professionals are now choosing to open their own businesses. Add to that how more major players have announced their willingness to increase basic pay by around 3% plus bonuses this year to retain employees. The last significant basic pay adjustments happened way back in 2008.
Still, no one can deny the significant shift small businesses made during the height of the pandemic. Companies that could stay afloat turned to digital means, with Facebook reporting a 23% increase in companies that utilized eCommerce features, 16% delivery tools, and 37% online payment methods.
Some of these small businesses also branched out into new territories. Non-academic educators started offering virtual classes, restaurants turned to virtual events or delivery systems, and accessory sellers focused on marketing health essentials like masks and hand sanitizers.
While global business remains a 'survival for the fittest' landscape, agile small firms that were resourceful enough to weather the pandemic storm proved to be the biggest movers. Of course, more have taken notice of such possibilities.
Small businesses should remain competitive
New approaches in digital marketing paved the way for 90% of small businesses to be more connected to their target markets today than ever. With increased sales, 44% of companies now have the leverage to raise their starting offers for new employees and offer additional perks.
Cost-efficient tools and services from various startups that aim to help small businesses play on a leveled market against more prominent companies enticed 70% of new companies to fund such digital marketing solutions out of their own pockets. Still, many have to apply for business loans, and thanks to Fintech, these new companies gain quicker approvals and access to funds.
While it helps that 57% of US consumers plan to purchase goods locally, there is growing competition among small businesses online. Most thriving small businesses began investing in online payment systems, which 88% say are essential from 2022 onwards to rise against the sea of brands out there.
Aside from bolstering their online payment systems, small businesses should also optimize user experiences on their websites and social media channels to increase traffic and conversions. At the rate that the global economic crisis is going owing to both the current health crisis and the ongoing war in Ukraine, countering rising inflation figures with exceptional purchasing experiences remains important.
Such macroeconomic issues will force raised prices for small businesses for months, if not years. Given these challenges, operational strategies toward more seamless supply chain processes and seeking long-term secured funding will also be essential.
Where should small businesses go from here?
Small businesses operating and catering to Russia belong in another world that requires unique solutions. However, Russia's war in Ukraine will inevitably lead to a domino effect that will significantly force global enterprises to adjust.
Due to NATO's existing sanctions and logistical impediments set up in condemnation of Russia's offensive against Ukraine, retailers face the risk of higher supply costs, supply chain problems, and decreased markets. Nobody knows how long the war will last, nor how devastating its economic impact will be. But small businesses should keep their stocks filled up to address upcoming future demands while also complementing their online stores with brick and mortar shops if they can.
Despite the inevitability of decreased earnings during the first half of the year, small businesses should leverage the power of tech and traditional marketing strategies to rebound starting the third quarter of the year. Retail companies should remain focused yet, at the same time, cautious of uncertainties. What is certain, though, is that consumers will bear the brunt of the economic impact, and small businesses could do better if they address their customers' pain points.
Still, current trajectories for smaller businesses tell us that many entrepreneurs can keep their businesses open with proper contingency measures in place. Such actions would have to include online security protocols, better vendor-customer communication, flexibility in employee relationships, and meticulous auditing.
With disruptions in logistics, trading, energy, and overheads, small businesses must note that retail sales during last year's holiday season increased by 14.1% despite the health crisis.
However, the current conflict in Europe is a different kind of beast. Knowing how consumers absorb the trends or feel they are affected by world disruptions can help retail companies scale their businesses and brace for more financial impact in the coming months.