As we slowly emerged from the pandemic in 2022, small business owners, while optimistic, were faced with inflation, the tightest job market in recent memory, and continued challenges in sourcing supplies. As we enter 2023, the question of whether or not we will experience a recession is unclear, but what is clear is that small businesses owners will continue to face operational challenges. Nevertheless, business owners are resolute and resilient and economic outlook surveys indicate that the majority expect revenues to increase this year and many plan to expand. So, what should entrepreneurs expect in 2023?
Inflationary pressures continue.
The Federal Reserve Bank will continue to fight inflation in 2023, which may result in new interest rate increases. Small business owners need to be proactive in managing costs and developing strategies to improve efficiency. There may be opportunities to investing in technology, streamlining processes, and in consolidating services and accounts.
Cybersecurity attacks to small businesses will increase.
According to Forbes, small businesses make up over 40% of all data breaches. As the risks increase, it becomes more important than ever that businesses become insured against cyber-attacks. A first step in defending the business against such breaches is to understand what measures are currently in place. Talk to your insurance provider, internet services provider, and banking institution to learn how the business is being protected and learn about additional measures that can be taken.
Borrowing costs remain high.
Business owners looking for access to capital should become familiar with their local CDFI’s and economic development organizations. These often have financing programs with features that make them attractive in a high interest rate environment, such as lower closing costs, and flexible terms. For those with credit cards, finding ways to offset the high interest rates with credit cards that offer rewards, or 0% balance transfers may be an alternative worth exploring.
Labor market remains high.
It is difficult for small businesses to compete for labor in this market, nevertheless, those looking to hire may be able to gain a competitive advantage by offering a better culture and flexible working environment with benefits such as hybrid workplaces and flexible schedules.
Strategic planning trumps being reactive.
While we do not know whether a recession will occur, small business owners should be prepared to endure the ebbs and flows of the economy, and there is no better way to achieve long term success than through strategic planning. The process of developing a growth strategy requires developing deep insights on business operations, its strengths and weaknesses, threats, and opportunities for growth.
For entrepreneurs looking to become better strategic thinkers, the Greater Philadelphia Hispanic Chamber of Commerce offers a Accelerate Business, an entrepreneurship education program that helps business owners develop the practical and strategic thinking skills to manage their business and develop a 3-year growth plan. The program is accepting applications for the spring 2023 cohort. To apply, visit philahispanicchamber.org.
Jennifer I. Rodríguez is the President and CEO of the Greater Philadelphia Hispanic Chamber of Commerce.