With 2023 rapidly coming to a conclusion, businesses are starting to gear up to hit the ground running in 2024. The new year is the perfect time to implement new processes and strategies ahead of the next financial year, but new opportunities are not without their challenges and there are a number of things to be wary of as you look to start the next chapter.
Particularly if you own a small business, times might be tough, and it’s important to approach with caution if you’re hoping to go from strength to strength in 2024. Whether your objective is to survive or you’re hoping to compete with the industry giants this year, being aware of the biggest challenges for small businesses will stand you in good stead moving forward.
Economic Uncertainty
There’s no denying that the past year has been an economic challenge for businesses big and small. High inflation has had a huge impact on businesses, with overhead costs and interest rates rising in response. Although the latest ONS statistics show that inflation is starting to decrease month-on-month, figures are still higher than the government’s 2% target with no obvious sign that much will change as we approach the new year. Small businesses are likely to bear the brunt more strongly than more established firms and retailers, with fewer economies of scale that give a little bit of breathing room when it comes to maintaining profitability in tough economic times.
Waning Customer Demand
Economic uncertainty has also had a significant impact on consumers who find themselves with less cash in their pockets at the end of each month. Budgets are not stretching as far as they once were and the result has been an obvious decrease in customer demand, particularly for businesses in non-essential sectors like retail, leisure and hospitality. Small businesses feel the impact of this waning customer demand most greatly as they find themselves competing with the longstanding brand recognition of more established businesses. It’s incredibly tough to successfully pry customers away from their existing loyalties at a time when attracting custom is difficult and small businesses will have to ensure that their goods or services really stand out to hold firm in this battle.
Managing Burnout
As markets become more competitive, it can be tempting to work harder not smarter. Particularly if you own the small business in question, you’ll feel a personal sense of responsibility when it comes to making it work and it’s easy to slip into habits of working late or during your time off. However, extra hours can quickly lead to burnout and additional stress and this will only hinder your chances of maintaining competitiveness against businesses with larger or more established workforces. Small businesses must make sure they stay focused on the quality of their output rather than the quantity and small business owners should not be afraid to communicate, delegate, and work as a team.
The Power Of AI
Artificial intelligence (AI) is a bit of a double-edged sword. On the one hand, the rise in the prominence of AI is a fantastic opportunity for small businesses. If the power of AI can be harnessed effectively, small businesses can boost efficiencies and cut costs. However, successful integration of AI requires support from employees which can be hard to win and can come at an initial financial cost that is simply not feasible for small businesses. Striking the right balance between trusting the talent you already have but not getting left behind when it comes to innovation will be a key but inevitable challenge for small businesses in the months to come.
Talent Acquisition
The challenge of talent acquisition will be an interesting one for small businesses ahead. On the one hand, recent redundancy spikes mean that a larger pool of talent is competing for fewer vacancies. In theory, this should make it easier to attract and retain new recruits. However, the fact remains that small businesses will still be vying for skilled professionals against larger corporations. Employees will be carefully weighing up their next move and more established businesses are typically better placed to offer the incentives that might seal the deal like enhanced benefits packages and development opportunities. Small businesses will need to think strategically if they need to hire in the new year and work out what will make them stand out, whether that’s a focus on employee wellbeing or competitive bonuses.
There’s no doubt that the coming months will pose a range of challenges to small businesses. Maintaining competitiveness in an economically uncertain market will be difficult for all involved, and small businesses will need to focus on what really makes them stand out to win new customers, attract top talent and avoid unmanageable stress.
If you are a small business owner and are concerned about your ability to stay fighting in tough conditions, don’t hesitate to seek advice at the earliest opportunity. The experienced team at Ballard Business Recovery can work with your business to help you gain a sense of stability and ensure that you have the best chance of overcoming the biggest challenges for small businesses and meeting your objectives in 2024. Get in touch today to find out more.
