Watch for these developments affecting small businesses in 2023.
Alternative financing options are becoming more common for SMEs and could become an important option as interest rates rise.
Watch for increased investment in digital marketing as well as increased exposure to traditional media.
HR departments are increasingly offering employees better benefits related to childcare and mental health.
This article is for entrepreneurs who want to understand the key trends affecting small businesses in 2023.
Small businesses need to adapt to a constantly changing marketplace. In order to meet customer needs and stay one step ahead of the competition, it is important to monitor the trends that will affect the way your business operates, and there is no better time to look back than at the start of the New Year. That’s why we teamed up with experts in the fields of finance, marketing, technology, and human resources to find out what to expect in the coming year and how to help your small business succeed.
Trends in Small Business Finance
Experts predict the following trends will impact small business financing this year
Alternative sources of financing will meet unmet funding needs.
Financing may not be an option for many business owners, especially for companies that have suffered significant financial losses in the turmoil of the past few years. In such cases, alternative sources of funding, such as alternative lenders or investors, may be essential to obtaining the necessary capital.
Courtney Lawless, venture capitalist and co-host of the Amazon Prime series “Wolf PAC,” says, “Alternative sources of capital will play a pivotal role in keeping a company solvent. She said, “Alternative capital includes grants, fintech, venture capital, angel investors, peer-to-peer lending, and crowdfunding. These are important because many companies that actually need capital cannot meet the requirements of traditional sources of funding.”
Rising interest rates have the potential to cool the economy.
As part of its aggressive efforts to curb inflation, the Federal Reserve has raised interest rates four times in 2022. Although inflation has begun to decline, higher interest rates are expected to continue through 2023, cooling the economy and even potentially pushing it into recession. Rising interest rates make borrowing more expensive for businesses and their customers.
These higher costs reduce the willingness of small businesses to invest in growth, borrow, and otherwise hedge risk. At times like these, it makes sense for firms to cut back on spending and expect their customers to do the same. Federal Reserve Chairman Jerome Powell has indicated that he expects to cut interest rates in 2024, but this could change depending on inflation and other economic conditions.
Small Business Marketing Trends
In 2023, experts predict increased investment in social media, user-generated content, and entertainment.
Spending on social media will increase.
With major social media platforms cumulatively having billions of users, it is not surprising that social media has grown as a target for marketers. This growth is expected to continue in 2023, but will slow somewhat. Advertising agency Zenith Media estimates that next year, social media’s share of total global ad spending will increase from 55% to 57%.
While social media advertising is growing in importance, competition is also intensifying. SMBs should focus on a multi-channel organic approach to build audience and brand awareness. While advertising can drive organic growth, SMBs should not get caught in a social media arms race with competitors when an organic approach such as content marketing offers a better return on investment.
Marketers leverage their best customers.
In an uncertain market environment, marketers will turn to their most dedicated customers as a source of revenue. By relying on existing customers who demonstrate loyalty to the brand, marketers can expect to drive sales and keep the business ahead of economic headwinds.
Zarnaz Arlia, Chief Marketing Officer of customer experience platform Emplifi, says, “A cost-effective way to identify and leverage brand advocates is through strategic UGC (user generated content) activities.” Brands can maximize their value by promoting UGC through exciting offers, branded hashtags, contests, and even e-commerce sites.”
User-generated content is often less expensive than more traditional marketing efforts, and the results can be impressive.” Authenticity is what today’s consumers crave, and nothing is more authentic than the “voice of the customer,” Arya said.
Marketers will seek to entertain customers.
As brick-and-mortar retailers fight to bring customers back, marketers look to make the shopping experience more exciting, said Gorana Seeley, vice president of global retail at ARHT Media, “Consumers want to be inspired to buy. They want to be inspired to buy,” says Gorana Seeley, Vice President of Global Retail at ARHT Media.
ARHT, for example, is betting that holographic displays will attract significant foot traffic. Leveraging new technologies to attract and delight potential customers will continue to be an effective way to engage them.
Says Seeley, “We can bring celebrities and influencers directly to the sales floor to interact with consumers in real time and showcase our products.”
Small Business Technology Trends
Look for the following technologies to transform your business in 2023
Generative AI will disrupt business operations.
Generative artificial intelligence (AI) is the ability of software to generate text, music, images, and other creative creations from simple descriptions. Although this technology has only recently entered the mainstream, its implications are huge for many functions across businesses.
Venture capitalists and large corporations are investing billions of dollars in generative AI. No one knows exactly what the impact will be. But for small and medium-sized businesses, we can expect to see an ever-increasing number of encounters with generative AI tools that promise to revolutionize their operations.
Automation will become increasingly important.
AI-powered automation will increasingly work alongside the tools that companies already use to streamline various processes and functions. Logistics functions will increasingly revolve around automated functions, from warehouses to robotic delivery systems, said e-commerce CEO Wolf Bauert. Automation, he said, “will allow retailers to streamline their operations, freeing up employee time to focus on more creative work.”
In addition, automation is expected to play a key role in providing more personalized recommendations to consumers. Automation will allow companies to understand visitors based on their past behavior, demographics, and other data to create online interactions, recommendations, and offers that are most likely to appeal to specific users.
Augmented and virtual reality come into their own.
Augmented reality (AR) and virtual reality (VR) have been talked about for some time and may be more widely adopted by businesses in 2023. Best of all, small and medium-sized companies could be the first to embrace the trend.
Virtual and augmented reality will allow us to experience the world differently. Especially during a pandemic, it can be very powerful,” said Joe Apfelbaum, founder and CEO of Ajax Union, a B2B marketing firm.” If you want to go to networking events, you can go to the VR networking events that are happening right now; you can create trade show exhibits where you can experience VR and AR at affordable prices.”
AI and big data will drive personalization.
Other technologies that companies can’t stay away from are AI and data analytics. These two technologies are an ideal combination, allowing companies to not only collect large amounts of data, but also use machine learning to make sense of that data. The insights gained can then be used to target marketing campaigns or find new efficiencies in internal processes.
Says Apfelbaum, “Big data has enabled a high degree of personalization.” We can know what our customers want in a predictable way, and we can use that to create custom user experiences.”
What AI can do is not just contextualize business data, Apfelbaum says.” For example, this call is textualized by AI.” Apfelbaum says.” If I say ‘action item,’ it automatically takes the action item. If I say ‘$50,’ it automatically creates the money item I am referring to.”
Getting started with AI is more affordable than you think.” Depending on what your business is and what you want to accomplish, AI and automation can be very affordable.” Apfelbaum states, ” You can
SMEs drive the adoption of new technologies.
A common misconception about developing technologies is that they are the domain of large corporations. But Apfelbaum says the opposite is true.
If you’re a small business and something new technology comes along,” he says, “you can implement it right away. Large companies have invested so much in testing and getting everything set up that they don’t want to change again.”
That ability to adapt to evolving technologies will give SMBs an edge and drive mass adoption of technologies like AR, VR, and machine learning in 2023.
Did you know?
Developing technologies like AR, VR, and AI will begin to be adopted by mainstream businesses and consumers. SMEs will be critical in driving this mass adoption.
Human Resources
As demand for quality talent increases, employers will look for more ways to attract and retain talented employees in 2023. Look for the following trends
Child care benefits will become more common.
With many companies still struggling to attract workers, more may offer child care benefits to entice parents to fill vacant positions. Ensuring that children are cared for is a major priority for parents who are forced to work late or long hours after hours. Companies that offer child care benefits may be more likely to attract job seekers than those that do not.
Jessica Chang, CEO of WeeCare, a child care network, says, “Benefits like these help employees feel supported and valued, which leads to higher job satisfaction and retention.”
A variety of options are available, including search assistance, full or partial payment, and emergency backup care. Some companies offer onsite day care so that children can work near their parents and be easily picked up when their parents’ shifts end.
Companies are reconsidering sick leave to include mental health.
Occupational burnout is a problem for many employees, and productivity can suffer when good people burn out. As a result, many companies have chosen to make mental health a priority as part of their PTO policies. This trend is expected to continue into the new year.
There will definitely be a lot of conversations about sick leave in 2023,” said Jamie Coakley, senior vice president of human resources at remote IT provider Electric.
According to Coakley, the increase in remote and hybrid work will further increase the need for mental health considerations. While many people now work from the comfort of their homes at least some of the time, this arrangement makes it easier to work long hours without unplugging for breaks, increasing the risk of burnout.
Says Coakley, “The traditional understanding of time-off doesn’t really apply to life these days, when remote work is becoming the norm.”
Trends Show the Future of Business
These are just a few of the many ways business is changing. With technological innovation and an unstable geopolitical climate, change and surprises abound. However, it is possible to be prepared for these changes and to successfully run your business even in the most challenging of times. By keeping an eye on the trends mentioned above and anticipating what they will bring to your business, you can gain a competitive advantage.
