2023 Challenges & Opportunities for Small Business Owners
With record-setting, inflation, and a red-hot labor market that turned hiring to support your business into a competitive sport, last year seemed about ten years long. Will we see a return to normal this year? The Fed may have something to say about it. The message is clear that lower inflation is the priority, not the economy. The "soft landing" may be possible, but a recession seems likely.
How can business owners plan for another year filled with uncertainty? Here are some ideas:
Break down the challenges
Access the resources you need
Think About Solutions, not Challenges.
Facing a problematic year can distract from long-term planning, but taking a longer view is the best way to address problems now and set yourself up for future growth.
Focusing only on the problem can be defeating. Instead, plan proactively for the solution. If you need to raise prices or adjust your product offering, a solid marketing strategy can mitigate the impact. Focus on your strengths in your marketing: are you a local business? Do you have longevity or history? What are your differentiators? Building a marketing strategy in today's digital world should incorporate your website, social media, and email.
If costs are an issue, is there technology that can remove friction in your process or allow you to automate or simplify? Is it time to rethink the costs you control, such as leasing or equipment costs?
Attracting and retaining talented employees in this market is many businesses' biggest roadblock to growth. Employees aren't just concerned about salary now – providing a good employee benefits package can make a difference in recruiting. Depending on the size of your business and your structure, there's likely a retirement plan that can create employee loyalty and provide both your business and you as owner with significant retirement savings and tax breaks.
Do You Need to Raise Capital?
For many business owners, raising capital is a way to overcome the challenges of an inflationary and potentially recessionary environment. Sources of money can be loans from governmental sources, such as the Small Businesses Administration, banks, or credit unions. You may also have private sources. Another option is to offer an equity buy-in to an investor or as part of an eventual succession plan.
These start with getting your business accounts in order and presenting your business in the best possible light. Are your taxes pristine? Can you shift to prioritize repeatable income? If you have lumpy income from big commissions or jobs, can you provide a history that identifies cyclical or other predictable catalysts for these?
Have You Thought Through Your Taxes?
Changes to the business climate may present opportunities to save on taxes, and not just from lower revenues. It would help if you considered your taxes from a multi-year perspective so that you can plan for changes to your income and expenses. New marketing spending, professional fees, and equipment costs may be deductible. The cost associated with starting a retirement plan is a tax credit.
Do You Have the Resources You Need?
You can only do some things yourself. Being realistic about the demands on your time is the first step – you need to have a life and a business. The next level is identifying what needs to be done by you and what you can delegate to someone else. From there, think through the following:
Is someone already on staff who can take on additional functions or lead projects?
What can you outsource? Where will you find those resources?
Small business owners often need a quarterback that can manage multiple projects, whether internally led or externally sourced. Hiring a marketing team, working with a tax professional or accountant, or getting a legal team in place for a sale or equity restructuring is a big project.
Working with a financial advisor may be a solution. They provide expertise developed by working with business owners at all phases of the cycle. They may also have access to a network of professionals that can be brought in to work on specific problems. Working with a financial advisor can also help you keep your personal financial goals and your business goals working in tandem.
The Bottom Line
Growing a successful business is challenging, no matter the macro environment. Keeping a long-term plan in mind, and ensuring you have the right resources, can help you reach your goals.
If you are navigating your finances and trying to understand how your finances can enable you to achieve your goals, feel free to place a complimentary 30-minute meeting on my calendar. In that meeting, we can discuss your objectives and situation.
Have something on your mind?
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