Growing a business can be a long and arduous journey filled with challenges. However, currently, a dicey economy and unpredictable situations are leading to more trouble for large and small business owners alike. While the public may have moved on from the COVID-19 pandemic, the ripples are still being felt across the economy in a wide range of industries. This is taking the forms of heavy costs, delays in supplies, and a change in worker behaviour. On top of this is the damage that has been caused by turmoil overseas including the unstable situation between Ukraine and Russia. Over the last few months, inflation rates have skyrocketed putting pressure on general consumers and business owners. Together, these factors have guaranteed that the UK and indeed, the rest of the world are slipping into a deep recession that will likely last more than a year.
With these factors taken into account, there are four main factors that could block business growth in 2023. These are:
- Supply chain security
- Challenges keeping up with a digital transformation
- Talent Retainment & Recruitment
By understanding these challenges, business owners can take the right steps and preemptive measures to ensure their companies continue to thrive and do not stagnate.
Barrier 1: Inflation
Recently, inflation accelerated to a 41-year high at 11.1%. This isn’t just squeezing the pockets of homeowners. It’s hitting businesses too and while the government is attempting to take measures to get the rates under control, it’s important for businesses to address individual concerns.
Small businesses are impacted by high inflation rates in a variety of ways. The starting point is employee wages. As rates of inflation rise, employees demand higher wages to keep up with the costs of living. This puts more financial pressure on businesses. If employees don’t receive fair wages, they may move to companies that can provide the fair pay they desire. We’ll discuss this further down.
As well as this, inflation will also make it more difficult for business owners to access the supplies they need including materials and products. They may also need to wait longer for stock to become accessible, particularly when taking into account shipping costs.
It’s not just the small business owner that is impacted by inflation. Suppliers are affected too and may struggle to keep up with turnaround times while meeting the growing demand. This can lead to shortages due to cost.
How Can Businesses Tackle Inflation
There are various steps small businesses can explore to tackle inflation and ensure it doesn’t prevent growth.
First, you may want to consider completing a break-even analysis. This will help determine if price increases could result in stronger profit margins. However, research is required because you may lose too many customers due to increased costs.
Reduce Your Costs
To tackle inflation it’s important to get costs under control. This does mean tackling expenses wherever possible. You need to ensure that your business is achieving maximum levels of efficiency. There will always be wastage in your business whether that’s due to how you use your time or even poor operating systems. Now is the time to consider making the changes necessary to ensure that your business is reducing costs as much as possible.
Renew Your Plans And Forecasts
Rising rates of inflation are going to mean that you need to rethink the plans that you already had in place for business growth. You may even want to consider creating a new cash flow forecast and working out a fresh budget. This will help ensure that you are more prepared for the challenges that lie ahead with a suitable business model and structure in place.
While inflation rates have surged, the central bank does expect inflation to begin to drop in 2023. However, it will still be higher than most small businesses can comfortably manage without taking the right steps.
Barrier 2: Supply Chain Security
A strong, secure supply chain is key to running any business effectively. However, as already mentioned, supply chains are being disrupted for countless industries. Again this is partly due to inflation and more specifically the cost of fuel. The cost of fuel has constantly fluctuated through 2022 and while prices have now stabilized slightly, they are still at a far higher point than usual.
Another issue is that the UK relies on just-in-time supply chains. These utilize everything from roads to ships and factories, ensuring that goods are constantly on the move. This does provide advantages because large spaces for storing items are not as necessary. However, one issue and the whole system crashes. This could be due to fuel costs, or even closed roads. Currently, the disruption is due to a shortage of the right, qualified drivers.
Brexit has also caused trouble for small businesses. While it is not the overall cause of supply chain issues, it is certainly contributing to them in a variety of ways. The EU is the largest trading partner for the UK. As such, it should come as no surprise that complexities in trading between these two powers have brought trouble.
How Can Businesses Help Preserve Supply Chain Security?
The problems causing issues with supply chain security aren’t in the control of small business owners. However, there are still steps that you can take to mitigate levels of risk and ensure that your company isn’t hit as hard by a supply chain issue.
Recognize The Signs Of Disruption
First, it is important to recognize the signs that your supply chain is about to be disrupted. For instance, you should take note if you witness a decline in a supplier’s culture of quality control. This can be the case if a supplier is not informing you about emergency issues. If you are visiting the site of a supplier, look for evidence of low-quality control.
Utilize An Emergency Management Centre
It’s important to deal with an issue with your supply chain as quickly as possible so that you can prevent a disaster or a long-term problem. By setting up an emergency management centre as part of your business model, you can ensure that all aspects are taken care of the right way. This could include the requirements of your customers as well as suppliers and your business team.
Build Up Your Inventory
You may also want to consider keeping a larger stockpile of essential products and supplies. This will give you something to fall back on and ensure that you don’t have to worry about leaving your customers without products for months or weeks.
One of the best ways to protect your supply chain is by making sure that you have backup suppliers who you can rely on. By diversifying your supply base, you can guarantee that you always have someone else to turn to to get the supplies and products required.
Barrier 3: Keeping Up With Digital Transformation
The world is moving quickly these days and this is in part due to the constantly evolving tech available. Businesses are under pressure to keep up with digital transformations and ensure that they don’t fall behind key competitors who are vying for the same audience and clients.
The pressure of digital transformation has led to 52% of companies on the Fortune 500 list becoming obsolete since 2000. These businesses were unable to keep up the pace of the current digital revolution and it’s vital that your business does not fall into the same trap.
Without the right digital transformation, your business will be operating at a slower speed compared to key rivals. This is going to mean lower levels of growth overall, higher costs and a reduction in demand over time as clients switch to better, more advanced alternatives.
There are various areas of digital transformation but let’s look at an area that you may have overlooked.
Digital Transformation In Marketing
Digital transformation in marketing is a ground that is certainly well-trodden. You might assume that if you have strong digital branding, you’re active on social media and you’re using some forms of automation, you’re keeping up with the right pace. However, don’t be so sure.
To gain the right footing with your digital marketing transformation, you need to make sure that you are constantly harnessing the new power that is provided by the digital enterprise. This means that your business marketing model should constantly be evolving. That includes:
- What you are offering
- How you are interacting with customers
- How your marketing system engages customers
- How it operates
Essentially, with the right digital transformation, you can future-proof your marketing strategy. There are various elements that should be part of this transformation if you want to ensure growth.
AI is no longer something that is confined to the realms of science fiction. It’s being used on a daily basis in the marketing world and it should be part of your strategy too. AI can be used to analyze customer data and provide more powerful, relevant customer insights. This can include ensuring that you are offering customers personalized recommendations and creating targeted ADs. AI can also help ensure that you are up to date with key customer trends and various preferences. One study found that AI can increase sales by 52%.
Another element that you should be focused on is personalization. With the right automated email marketing technology, you can reach your customers on a personal level and ensure that they are more likely to engage with sales as well as other events. Personalized emails are, in general, far more effective, compared to mass emails that you can send out to a general audience and will ensure strong open rates.
Programmatic Ad buying is the process of using software to purchase the right digital advertising solutions. This makes the entire process fast, efficient, and easy. It will guarantee higher conversions while lowering customer acquisition costs at the same time. Programmatic advertising is expected to be a huge trend in the marketing world next year. You can climb above competitors if you start to use it now.
Barrier 4: Talent Retainment & Recruitment
The final barrier to business growth that we need to address is talent retention and recruitment. Your business will only ever be as strong as the team you have operating behind the scenes. That’s why you need to focus on the right recruitment and retention process.
Currently, employees are more focused than ever before on ensuring that they receive the right work conditions and fair levels of pay. This is made more complicated when businesses are already experiencing higher costs. However, it’s still important that you are providing the right benefits to your employees. Here are some of the steps that you can take to attract the right talent and ensure that they remain on your team in the long term.
Run The Right Ad Campaigns
First, you need to run the right ad campaigns when you are working to attract new talent to your business. When you create an ad for your company that is designed to appeal to employees, you should be putting in the level of attention that you would for an ad designed for customers and clients. However, instead of demonstrating the value of your products or services, you need to highlight your business culture. You should also be promoting positions in your business in a way that will attract a diverse and highly qualified group of potential candidates.
Research What Employees Want
Next, you need to research what employees want from your business. This isn’t as simple as higher levels of pay. For instance, a key trend and a side effect of the COVID-19 pandemic is employees who want a hybrid work model. This means that they can work at home as well as in the office on different days or times during the week. You should consider providing this opportunity to new candidates as employees believe this is key to a better and healthier work/life balance.
Ensure You Have A Great Onboarding Process
Furthermore, you need to ensure that you have the right onboarding process in your recruitment strategy. 88% of companies don’t onboard the right way. Research shows that high levels of churn can be due to employees leaving shortly after they have been hired for a role. This will often be because they weren’t provided with the right introduction to the company. If you deliver a strong onboarding process, you can ensure that they do settle in and feel as though they fit into your business or team model.
It’s clear that there are a lot of challenges for small business owners heading into the New Year. While some of these issues may seem beyond your control, with the right steps, you control the issues here and ensure that your company is in a far stronger position for the future.