The huuman layer: 12 Predictions for Small Business in 2023 🔮
In our final market report of the year, we're going to mix it up and make some predictions about the state of Small Business in Canada in 2023.
If you normally receive our weekly huumans market insight report - this is our new look for the new year - something we’re calling ‘The huuman layer’. We’ve made the change so we can expand our insights and small business owner support in the coming year - so in 2023 expect better analysis, better insights and more useable resources in your inbox each week.
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This week we’re doing something a little different from the usual small business and market insight and analysis. The markets have started to slow down for the holidays and everyone is starting to think about taking some time off and consuming unwise levels of food and drink. So with that in mind, we decided to ask our huumans experts what they felt might be in the future for Small Business owners in 2023.
🔮 Small Business will benefit from Big Business failures
With the economy cooling off the back of reduced consumer spending triggered by inflation and rate rises, bigger businesses (being less agile) are looking to cut costs, and in the new year this is going to mean cutting staff. We’re cheating a bit here, because this is already happening (as we’ve reported), but we see this as a trend that’s going to continue into 2023 and accelerate. The oil tankers are definitely trying to turn course, and there’s little doubt it’s going to get messy. This could be a boon for Small Business hiring as previously tenured employees in big businesses begin to rethink their careers post-redundancy and look to join smaller, more agile, (dare we say more exciting?) businesses - where their experience will be better used and appreciated. If you’re struggling to hire talent into your business right now, 2023 could be your year.
🔮 New year, new business models
Small Businesses have always had the advantage of being more agile and better at adapting to the micro-changes in local markets. After all, they tend to be closer to their customers and communities. As the move to online-only, post-pandemic sales has started to see ‘mixed results’, we predict small business owners using their unique entrepreneurial skills to find niches and opportunities that blend online, physical (and more novel) approaches to growing their businesses that until now would have seemed unusual or maybe bizarre. The rule book got a bit ripped up in 2022 and the traditional model approaches saw some unexpected failures - so 2023 might be the year for experimental ideas, different takes, new thinking and new normals.
🔮 Inflation will fall, but the market will be slow to heal
We think we've seen the last Bank Of Canada rate rise, we think inflation is definitely over the peak, and while interest rates are always slow to react - we think your variable rate mortgage is about to get cheaper. So all good. What’s not so good is we think it’s going to take some time for customer confidence to come back. It’s going to mean lower spending (something we’ve already reported on this year), and this lower spending is going to persist well into Q3. Will we see a rebound in Q4 for the holidays? We think it’ll definitely be better for business that it was this year, but if we were to model our sales into the coming year, we’d be playing it safe while trying to diversify our market approach a bit. Now might be a good time to try new ways to stimulate revenue to fill the gap.
🔮 If you’re not online now, you will be
If your business is not online-savvy it will have to be this coming year. That might mean how your customers contact you. That might mean that you’re moving your invoicing to a digital, automated solution. That might mean you’re linking your bank feed to your accounts to get better insights. That might mean moving your books and operations into the cloud to understand your business better (yes, that’s our thing, but regardless of if you choose huumans to do this, it’s something you probably will need to consider this coming year). If you don’t have a good online or social presence, this is the year. In 2023, online Small Business tools are going to be more mainstream, more affordable and more unavoidable - and increasingly essential. With margins getting tighter and accessing new customers increasingly requiring real-time data, we see this coming year as being the year when Small Business makes the leap and fully embraces all that online has to offer.
🔮 We’ll all be automating what we can
Automation has been around for a long time. Most Small Business owners automate their invoices, for example, or have reoccurring payments coming from their bank account. But this year we predict Small Business will start to automate things they never previously thought possible. With the rise of amazing new platforms like DALL-E (which automates image creation through text inputs) and ChatGTP (which automates accurate content based on queries), Small Business Owners are going to have more access to automated marketing and knowledge resources. They’ll start to use existing platforms like Zapier to link their operations to increase efficiencies. Automations are become less and less the domain of tech businesses and those with ‘tech knowledge’ and this year we think we’ll see more Small Business owners investigating and adopting automations to improve their bottom line.
🔮 Advertising is dead as we know it
Up until now, if you wanted to advertise your business beyond just your local market, you’d probably pay Google, Meta (Facebook, Instagram) or Twitter to do it for you. We predict Twitter will see a divorce from small business (and big business) advertisers in 2023. For many businesses the shock-jock approach of Twitter’s new owner and it’s general instability will just become too risky. As search generally looses it’s shine and keyword costs rise, Google will stop becoming as attractive when choosing to spend money on customer acquisition. Instagram? Well Instagram is in a transition, working out if it’s for the kids or for the advertisers - and many small brands (and individuals) have seen their feed exposure hit by algorithm changes. Facebook for some businesses will still remain a go-to, but for others (maybe the majority), it just won’t bring in the leads they need as Facebook’s user base flatlines across North America. We think 2023 will be the year that the traditional ‘bundled’ big-tech products will start to loose their grasp on Small Businesses advertising, and we’ll see the development of new platforms and new creative ways to reach and talk to customers. Who will be building those new products and environments? We don’t know, and some of those we see appearing won’t be around by the end of the next year. But something has to change, and 2023 is the year the change will begin.
🔮 Data security will become a big Small Business problem
Data breaches are now big news when they happen, and customers are becoming increasingly aware of their data - and increasingly worried about how that data is used, stored and handled. In 2023 we’ll see new standards in data handling, and we’ll see businesses rushing to advertise their data security and internally figuring out what data security is, and what it needs to be. We see this riding a wave ahead of government intervention, with businesses realizing that their brand reputation and their brand story is increasingly at risk from data security and privacy concerns, and them making big steps towards making customer data and privacy a core part of their business (and marketing) operations. For Small Business this is usually an easier (and cheaper) adoption compared to bigger businesses, and we’ll see them pushing their privacy and data security as a competitive advantage.
🔮 People will be more important than profits
The market will be slow to recover, big business will continue to shed jobs, customers will continue be cautious and Small Business, which broadly had been struggling to figure out employees in 2022, will begin to focus in 2023 on solving how to keep the employees they’ve gained or retained. While wage rises patching the inflation gap might not be on the cards for everyone, Small Business will begin a focus on training, benefits, development, coaching - and generally finding a new approach towards their employees. We’ll see less top-down management structures. Less mandated schedules and 9-5. More peer-to-peer management styles. Better paid time off and reinforced parental leave options. Support and recognition for mental health, neurodiversity and diversity as a whole. We’ll also see Small Business openly embracing and figuring out sustainable hybrid and / or remote working as a means to stay competitive - in both the hiring and thriving space.
🔮 Crypto will fade away
Crypto was the future of payments - hell, it was the future of everything at one point. Now not so much. 2023 will see Crypto return to the world of die-hards, bullish investors and technologists - as the fall out from the criminal collapse of FTX reduces any lingering trust Crypto had left. Really the problem with Crypto is - it was a great idea, but after years of the worlds smartest minds working on it, it ultimately failed to gain everyday meaning for normal people. And that’s primarily because it failed to be accessible (no-one worked out how to set up or manage a crypto-wallet), secure (that crypto-wallet would get stolen…a lot) or reliable (you’d have no idea how much would be in that crypto-wallet when you opened it - and the reason you lost the majority of your money would be near-impossible to understand). Then there’s NFTs - an entire deeply complex technical (and culturally powerful) concept reduced to pictures of badly drawn monkeys in hats that Justin Bieber bought for $1M which immediately lost value. It was market speculation in the worst form. Will Crypto return as the future? Perhaps, but in 2023 Crypto, NFTs - the whole thing - will return to the tech-cave from which it came to plot it’s next moves.
🔮 Small Business funding will continue to struggle
We wish this wasn’t the case, but Provincially, Federally and even at the level of Business Development Bank Canada (BDC) - we’re going to see little to no real progress in funding Small Business or supporting owners. Still lagging from the back-end of the pandemic, mired by obvious staffing shortages and inevitable opportunistic provincial politicking - if you’re a Small Business in 2023, any funding process is unlikely to improve and could very well deteriorate. We’re still(!) in that ‘blame-it-on-the-pandemic’ phase apparently, and the traditional banks are showing little interest in improving the situation given that lending money isn’t what it was. Is there a glimmer of hope? Will ‘Small Business Week’ cause a groundswell of heartfelt action? Will industry bodies do more than just put out negative press releases and endlessly whinge? We’re saying no.
🔮 The news will continue to be in a doom-cycle
Small Business is struggling. Owners are fed up. Businesses can’t cover their leases. The news this year has been full of negativity, and we just don’t see this changing as it serves too many interests beyond the business owners themselves. Negative stories are easy to tell, and negativity is great fuel for political and financial power plays. In the real world of course, Small Business owners are getting on with it. They’re powering the national GDP. They’re taking risks. They’re ‘doing’. So we expect more negativity smothering the positivity in 2023, despite so many things to celebrate. Be mentally prepared for it and ignore all those knee-jerk stories of doom - it’ll do you good.
🔮 Talk of recession won’t go away, but it’ll be impossible to prove
Speaking of doom-cycles, recession talk is not going away, and in 2023 it will persist - but there will be no real conclusions. A lack of conclusions is going to split Small Business strategy. Some Small Business owners will turn bullish and start spending. Others will go bearish and start holding cash. We predict that those who are more cautious will see the biggest returns in 2023, but not cautious at the expense of growing their business. We see a stop/start economic outlook while the talk of recession echoes around the market, and with no definitive proof of recession, a constant swing between ‘spend now’ and ‘save now’ opinions quarter to quarter. We think that those that recognize this back and forth rhetoric for what it is - people not knowing what they’re talking about - will find a cautious balance for their business and surprise themselves by end of year.
And that’s it for 2022! We hope you have a great holiday period, and we’ll be back in January with more insights.
If you’re a huumans customer, note that our unlimited business support will be available as usual over the holidays, but that - as ever - we respond before the next business day. So do mark the public holidays in your diary.