2023 Predictions for Small Business
Rising costs will pose serious cash flow challenges to SMEs
According to Simply Business’ SME Insights Report, 70 per cent of small business owners are worried about rising costs and believe it will be their biggest challenge in the year ahead.
With the backdrop of the energy bill relief scheme coming to an end on 31 March, those business owners with premises will feel even more pressure and spiralling costs, albeit we wait with baited breath on a new energy scheme from April 2023.
To keep cash flow positive, business owners must preserve cash flow over investment if they are concerned in the short term, but also with an eye on future growth. Overheads should be controlled or reduced where possible, upcoming tax bills accounted for before any investment costs are carefully considered.
Just like during the pandemic, business’ will have to evolve and innovate, and it is usually at the most difficult periods that new ways of working can be found to improve efficiency and lower costs and even the potential to discover new revenue streams.
Side hustles will continue
Since the pandemic, we have seen a huge surge of individuals with side hustles and transitioning from employment to self employment. We expect to see this trend continue.
The difference will be that people may well continue with both employment and self employment for longer, and the full transition to self employment coming much later, industry and sector dependent.
And of course lots of side hustles or businesses will pop up with different wants and needs based on the current economic and social landscape.
Chasing late payments from suppliers & clients will be a priority
As a small business owner, getting paid on time could mean make or break, particularly when cash flow is restrained from rising costs and increase to your tax burden. It is estimated that £23.4 billion is owed in outstanding invoices to UK businesses currently and with more businesses struggling to pay on time, we expect this number to rise considerably in 2023 and into 2024.
Now more than ever, whether you are a small business struggling to pay your suppliers or if you are not getting paid by your clients or customers on time, cash flow forward analysis is essential so you don’t run out of cash.
Wellbeing is still a top priority
The last few years has seen a relentless pressure particularly on small business owners, firstly the pandemic and now rising costs and tax bills.
It is no surprise that small business owners are struggling emotionally and are exhausted.
This is the time to look at how to ease the pressure where you can, maybe by reviewing your services or products or adopting new technologies to fine tune your operational processes, particularly if you cannot afford to hire staff or need to cut your headcount due to the looming recession.
Sustainability and climate action
Research from Deloitte has shown that consumers are increasingly looking to buy from companies that care about the climate.
As a small business owner, you may take your lead from larger companies on how to address sustainability and climate action, but unfortunately, many large companies have come under fire for over-stating their ethical credentials, such as Innocent Drinks, who had adverts banned for ‘greenwashing’, by trivialising the overuse of plastics by adopting the mantra of “reduce, reuse, recycle”.
So it is important as a small small business to really consider how your business impacts the planet, and make changes if needed - and then shout out about it with authenticity. It is not enough anymore to adopt mantras or slogans to appeal to buyers.
““Our very survival depends on our ability to stay awake, to adjust to new ideas, to remain vigilant and to face the challenge of change.””
