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Small Businesses Can Drive Success In 2023 With These Solutions

Small Businesses Can Drive Success in 2023 with These Solutions

Small Businesses Can Drive Success in 2023 with These Solutions

Welcome to Thomas Insights — every day, we publish the latest news and analysis to keep our readers up to date on what’s happening in industry. Sign up here to get the day’s top stories delivered straight to your inbox. According to the Small Business Administration , there are 33.2 million small businesses across the United States. No question these businesses have endured a range of challenges in the past couple of years, from the outbreak of COVID-19 and seemingly endless supply chain disruptions to the rapidly evolving demands of customers, a growing skills gap, and market dominance by large corporations. How are small businesses faring in 2023, and what steps can be taken to drive the best business outcomes? The Challenge: A Decline in Small-Business Funding Research from the Federal Reserve Bank indicates that less than one-third of small-business owners who pursued traditional financing received the funding they desired in 2021. This represents a steep decline from pre-pandemic levels. In 2019, before the outbreak of COVID-19, as many as 51% of small businesses in the U.S. received the full financing they sought from their bank. The Solution: Seek Alternative Financing For small businesses, securing credit is a critical part of driving growth. Today, there are several non-traditional options available, which include SBA Loans and Credit Key. SBA Loans The U.S. Small Business Administration’s (SBA) small business loans assist entrepreneurs and owners of small businesses to plan, start, and expand their businesses. This could include covering startup costs, funding an expansion, or investing in new real estate. It’s easy to qualify, repayment terms are generous and lengthy, and there are multiple options available to suit the varied needs of small business owners. Credit Key Thomas has partnered with Credit Key to provide 30-day interest-free lines of credit of up to $50,000. This enables small business owners to quickly access cash and buy from thousands of Thomas top-qualified suppliers. The Challenge: Skyrocketing Inflation Rates Lots of small businesses are booming in the post-pandemic world. But inflation, which reached a 40-year high of 8.5% in 2022 , is eating into the takings. Between July 2021 and July 2022, small business revenues grew by 87% , and yet their profits dropped by 4%. Kabbage surveyed 550 small businesses and found that 75% had been adversely affected by rising inflation rates. Meanwhile, the U.S. Chamber of Commerce recently reported that inflation is the number one challenge for 50% of small business owners. Inflation rates aren’t expected to stabilize any time soon. According to the Kabbage survey, 56% of respondents said they expected to feel the impact of high inflation rates until at least the summer of 2023. The Solution: Be Transparent and Know Your Limits Small business owners are rightly concerned about maintaining reasonable profit margins while retaining critical business. Can the costs associated with rising inflation rates be passed directly to the customer? If the future health of the business depends on it, the answer is a resounding yes. It’s no use striving to keep customers happy with competitive prices if it ultimately catapults the business toward bankruptcy. To preserve the respect, loyalty, and business of existing customer bases, open and honest communication is key. When a price hike is necessary, follow this five-step process: Step 1: Contact customers directly to inform them of the change in price Step 2: Explain “the why” behind the price increase Step 3: Focus on the positives, e.g. the quality of service provided Step 4: Keep the workforce in the loop to prevent miscommunication Step 5: Prepare for negative reactions. Other methods for managing rising inflation rates include negotiating better deals with suppliers and cutting out lower-margin products and services. The Challenge: The Growing Skills Gap In 2021, the Great Resignation saw 47.8 million Americans quit their jobs . While the rate of resignations has certainly slowed in the past year, the industrial sector remains concerned about a growing skills gap. It’s projected that there will be more than two million manufacturing roles left vacant by 2030, and these empty positions could result in the loss of around $1 trillion in GDP. The Solution: Nurture the Workforce In 2023 and beyond, small business owners must work hard to attract and retain top talent. Employees want flexible working options, a good work-life balance, and career progression. While small businesses may not be able to offer compensation packages that compete with large corporations, they can invest their efforts in building their brands, fostering a positive and inclusive workplace […]

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Daisie Hobson

Daisie Hobson is a Director at the Reshoring Institute and an engineer with many years of experience in manufacturing and project management.

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