Since the start of the COVID-19 pandemic, small business owners have faced ever-changing regulations, lack of cash flow, and general economic uncertainty. And 2022 brought its own challenges: inflation, rising interest rates and staff shortages, among others.
Entrepreneurs, however, remain resilient and optimistic about the year ahead. In fact, 66% of small business owners expect their revenue to increase in the next 12 months, and 52% plan to expand their business, according to Bank of America’s annual report at the end of 2022.
So what will 2023 hold for business owners?
NerdWallet’s small business writers offer their predictions and advice as the new year begins.
1. Banks invest everything in the customer experience
Kelsey Sheehy: Expect online banks and neobanks to up their game — offering higher interest rates on checking and savings accounts and more business-friendly features — as they compete for customers in an increasingly crowded space. Business owners should look for an account that goes beyond a basic deposit account and find one that adds value to their business.
Consider whether your bank can do more for your business. You can look for business bank accounts with lower fees or integrated tools (eg invoicing, accounting software). It might also be a good time to look for a high-yield checking or savings account that will help your business earn interest on your existing funds. Don’t hesitate to explore new options and talk to service providers about your needs.
2. Inflation requires adaptability
Hillary Crawford: Inflation could force business owners to start thinking more about how they can improve efficiency and save money in the long run. This could mean buying electric vehicles, overhauling their delivery process and improving the energy efficiency of their building.
3. Customized benefits attract new employees
Lisa Anthony: Labor shortages are likely to continue into 2023. Small business owners could gain a competitive edge in hiring new talent by offering benefits such as hybrid workplaces and other options that can attract workers who demand more flexibility from their employers.
Explore new and unique benefits your company can offer — such as mentoring programs, opportunities for growth and flexible schedules, and time off to attract and retain talent — even on a tight budget.
4. Borrowing costs remain high
Kelsey Sheehy: Business owners will need a way to offset high interest rates and a tight lending market, which will likely last through 2023. Expect balance transfer or 0% APR business credit cards to be in high demand in the coming year.
Borrowing costs are likely to remain expensive for now. If you need access to capital but a traditional business loan is out of reach, consider alternative financing options, such as business support or credit cards with rewards that match your business.
5. Communication is key to customer relations
Hillary Crawford: Engaging with customers on social media will continue to be important for brick-and-mortar stores, restaurants, and online businesses, especially when they need to raise prices or change their hours of operation. Inflation also affects consumers, and being honest about the struggles your business is facing can help them connect with you. Chances are they will be more understanding too.
Be clear and proactive when communicating with your customers as this can help preserve your relationships, even in times of uncertainty. Determine the best avenues for communication — whether it’s social media or other channels — and meet your customers where they are.
6. Business costs continue to rise
Rosalie Murphy: Small business insurance price growth slowed slightly in 2022, but costs are still rising rapidly, according to the latest data from the Council of Insurance Agents and Brokers. Price increases were most dramatic in cybersecurity and property insurance. As natural disasters and digital security breaches become more frequent and serious, some insurance costs may continue to rise even if inflation slows.
Lisa Anthony: Small business software costs are likely to rise this year. Some providers may increase their prices, while others may adjust the features they offer in their basic plans – making it more likely that you’ll get the tools you need by upgrading to a more expensive plan. Comparing the prices and features of competitors’ products will be just as important for businesses to get the services they need at a price that is within their budget.
The start of a new year is a good time to assess your business expenses. Identify areas where you could save money and/or where an alternative product might be better for your needs.
The best way to save money on your business insurance, for example, is to compare offers from multiple providers, Murphy says. If your insurance costs went up last year, take the time in 2023 to get online quotes from other companies or work with your insurance agent to see if you can pay less for coverage, she says.