Five challenges and opportunities for small business in 2024
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Today’s small businesses face extraordinary multi-layered challenges on local, state, national and global levels. Many challenges evolved from two years of COVID lockdowns, Russia’s war in Ukraine and staggering supply chain disruptions that caused economic turmoil.
Consumers and businesses experienced price hikes and rising interest rates and questioned who would absorb the rising costs of supplies? U.S. businesses were hesitant to raise their prices in the midst of inflation. They had to choose to pay that difference themselves or pass along some of those costs over to customers, and risk losing loyal clients.
A 2022 Goldman Sachs survey found that 91% of small business owners already were struggling with the economy’s impact on their industries, and 56% said the situation had worsened since the beginning of the year, painting a bleaker picture for the coming year.
So, what are the challenges and opportunities that lie ahead for small business in 2024?
Here are five of them.
- Defining and comprehending broader economic trends
The Federal Reserve has raised interest rates repeatedly to a level between 5.25% and 5.5% following a period of basically a 0% rate to combat the economic impacts of the COVID-19 pandemic. A recent business.org survey showed that 82% of businesses raised the price of their products or services due to inflation. Some businesses modified their inventory to save on costs, buying the minimum number of items they could store, while many business owners drastically changed their business model to fit into the new economic order.
Opportunity: Small business owners need to recognize the larger forces in play by understanding how inflation affects small businesses as well as supply chain issues, labor shortages, rising energy costs and other small business trends and understand what is driving them.
Honest communication between businesses and consumers might be the straightforward way to navigate these broader challenges and could bring benefits in the future. Small businesses have an opportunity to gain customer trust by being clear and transparent about their price increases, telling their customers in advance what is happening.
- Gaining new customers without a strong brand name
The process of finding and acquiring new customers can be costly and very challenging for smaller businesses that do not have a designated and sufficient budget and a strong household brand name like larger companies.
Opportunity: Small business owners, self-creators and aspiring entrepreneurs have a few ways to attract new clients without being a household brand name. The small business owner can create a personal brand and position himself or herself as an expert in their industry by creating a blog and publishing helpful content that demonstrates their knowledge to potential customers.
They also can optimize their small business website for search engines and further drive traffic and conversion to their store. The use of best practices for social selling and optimizing a website for enhanced user experience and the ability to monitor the right key performance indicators (KPIs) will increase small business success.
- Achieving increased brand awareness
A strong brand is important for growing a business. Increasing brand awareness is one part of that picture, resulting in building a loyal customer base who can recognize the small business brand instantly out of a lineup and also trust that small business to meet their needs.
A 2022 Salsify marketing survey states that 46% of consumers say that they would pay more for brands they trust. Small business owners and entrepreneurs can boost their brand awareness using an online eCommerce website as a powerful marketing tool.
Opportunity: Build an SEO strategy to bring more traffic to the small business website to help with business scalability. Create content by starting a blog, a podcast, and sharing social media visuals such as infographics that show off the brand’s expertise. Create a powerful business name that will make the small business stand out and build brand awareness.
Employees and employers have shown signs of burnout, depression and still feel exhausted in a late-pandemic crisis of productivity and will.
Ownership of a small business can be rewarding and it also can be emotionally draining. The small business owner is always “tuned in” for business development and experiences the stresses of inflation, rising costs, and the impacts of a prolonged COVID-19 pandemic. It is important to recognize the following signs of burnout, according to the World Health Organization.
- Feelings of energy depletion or exhaustion;
- Increased mental distance from one’s job, or feelings of negativism or cynicism related to one’s job;
- And reduced professional efficacy
Opportunity: Small business owners can engage in a couple ways to beat ongoing stress:
- Invest in assistance to delegate tasks, such as accounting, updating the company website or marketing;
- Take time off and recharge;
- Take time to celebrate successes, big or small, to maintain a positive attitude
- Stay current with the latest technology trends that can help streamline business operations
- Experiencing a lack of capital and cash flow
Capital and cash flow are a lifeline, especially for those starting a business, giving them the financial support to expand and evolve. The SMB Group, a research, analysis and consulting firm, found small business owners have been dealing with unprecedented uncertainty of cash flow and lack of capital during the last couple years.
Opportunity: Fortunately, there are different ways of obtaining funding, from Small Business Administration loans to private bank loans. The SBA offers a variety of loan programs to help small businesses, including 7(a) loans, 504 loans and microloans. Other methods of funding include finding an investor, venture capitalist or business partner, as well as crowdfunding online.
The next step is maintaining bookkeeping and proper cash flow management to ensure enough cash reserves to cover business bills and generate profits.
“Small Business isn’t for the faint of heart. It’s for the brave, the patient, & the persistent. It’s for the overcomer.” – Unknown
Glenn Ebersole is a registered professional engineer and Business Development Manager at PM Design Group, a nationally licensed A&E firm in West Chester, PA, with 14 offices across the U.S. He can be contacted at [email protected] or 717-575-8572.