New threats often appear quickly and from unexpected directions. For business owners, these steep challenges can pose significant risks. The best way to tackle small business risks is to be aware of the most prominent challenges and then prepare a solid strategy to overcome them. Inflation, higher wages, and slower business growth are three key challenges facing small businesses in 2023.
While there is no doubt businesses are facing considerable risk, there are strategies and solutions leaders can implement. Safeguard can help business leaders navigate their companies through these challenges, allowing them to achieve maximum productivity and driving long-term business success.
What small business risks should I be most concerned about in 2023?
Small businesses have faced many challenges over the past two years. Now they are facing new business risks in inflation, wage changes, and stifled business growth.
Small Business Risk #1: Inflation
Inflation is a global problem caused by labor shortages and supply chain disruptions. No matter what industry you are in, rising inflation is a key risk facing every business, with businesses seeing rising costs for everything from raw ingredients to labor. In the U.S., inflation has seen 40-year highs, with significant year-over-year Consumer Price Index increases. Beyond the immediate rise in costs, inflation creates additional difficulties for small businesses, influencing decision-making in regard to hiring, spending, and other planning decisions.
To remain competitive during inflation, business leaders should pay close attention to their productivity and efficiency, adjust expenses, strengthen their pricing power, and eliminate unnecessary work through these four tips:
- Pay Close Attention to Productivity and Efficiency: Now is a good time to evaluate your processes and look for areas where you can improve. Workflows, communication methods, and the work environment can all impact efficiency. When employees are productive, they use their time wisely, becoming more efficient and producing better results in less time.
- Adjust Expenses: Businesses need to take a hard look at their expenses, identifying what costs they might be able to eliminate and others they might be able to spend less on. Anything that’s not essential to business can be considered unnecessary spending and is a potential area for companies to cut expenses.
- Strengthen Your Pricing Power: Pricing power refers to the ability of a company to get the price it deserves for the value it delivers. Businesses can strengthen their pricing power in various ways, including identifying what differentiates their business from the competition, improving the uniqueness of their offering, and depending on customer relationships.
- Eliminate Unnecessary Work: Technology, automation, and outsourcing are the primary ways businesses eliminate unnecessary work. Calendaring automation, online collaboration tools, or outsourcing payroll are ways companies can more effectively leverage resources and bring costs down.
Small Business Risk #2: Worker Attrition and Higher Wages
Hiring effective, qualified employees is already challenging in 2023, and many small businesses may be unable to keep up with increasing wages in a candidate-driven market. To attract top-tier candidates, companies need to develop a strong employee value proposition (EVP) that defines your company, what it stands for, and what makes it unique. Companies that can more clearly express the benefits and rewards they offer have a greater advantage when attracting the skills and employees they desire.
Equally important to developing a strong EVP is focusing on employee retention. There are several areas where an organization can focus its employee retention efforts, and it’s not just salary and benefits. Effective employee retention strategies should include these key areas:
- Company Culture – Focusing on your core values can cultivate a positive work culture.
- Growth Opportunities – Investing in employee education and career development is a powerful incentive for employees to stay at your company.
- Employee Recognition – Employees want to feel recognized and appreciated for their work. This recognition can include highlighting professional achievements and personal traits that make an employee stand out.
Small Business Risk #3: Decreased Business Growth
Labor shortages and ongoing supply chain issues can stifle business growth. These disruptions often create operational challenges, leading to decreased customer satisfaction. Small businesses can work to mitigate these challenges by planning early when possible and focusing on customer retention. Three best practices for customer retention include:
- Focus on the Customer: There are so many other aspects of running a company that sometimes leaders forget the customer needs to be their focus. This also includes listening to your customer. A business will know how it can help customers achieve their goals through connecting and understanding.
- Personalize the Customer Experience: Personalization, meeting a customer’s individual requirements, increases customer satisfaction, drives loyalty, and boosts repeat purchases.
- Help Customers Feel Empowered: Make interactions meaningful, help customers save time, and focus on what your customer wants to achieve by using your product or service.
With many risks coming to businesses from all directions, leaders must focus on priorities, maximizing efficiency, improving employee retention, and increasing customer service. Your Safeguard Advisor will learn about your small business risks and help with personalized solutions. At Safeguard, we know your business can successfully move forward with the right products, services, and planning. Visit our site to get started.
- The best way to tackle small business risks is to be aware of the most prominent challenges and then prepare a solid strategy to overcome them.
- Inflation, higher wages, and slower business growth are three key challenges facing small businesses in 2023.
- Business leaders must focus on priorities, maximizing efficiency, improving employee retention, and increasing customer service.
- A Safeguard Advisor can help you be successful with personalized products, services, and planning.