Mid-year corporate business forecasts for 2023 are showing up and there is a lot of data about small businesses, specifically the loss of revenue through the pandemic, permanent closures and struggles. The surveys of small business owners’ opinions on the future of their business have been optimistic until the rapid rise of inflation.
The National Federation of Independent Business Owners (NFIB) is a leading source of data on small businesses. Every month they update their survey of independent business owners. The headline from the May 2022 report was
Small business optimism is at a 48-year low.
The pressure of inflation is the number one pressure on optimism.
Click here for the full report.
This dramatic drop in small business owner optimism points to a long-term struggle and complex decisions for all independent businesses. Envisioning a future under volatile conditions is unfamiliar territory for small businesses in particular. Owners must be focused on daily operations and health standards just to survive.
Now, small business owners are in uncharted waters. The combination of domestic and global uncertainty makes it extra challenging for planning, funding and implementing recovery strategies.
The article this month kicks off a series of articles about the future of small and midsize businesses.
Stay Above Survival Levels
Guidant Financial, a fintech company, gathers and reports small business trends with a broader view of small businesses.
The results of their 2022 report indicate that 65.3 percent of their respondents are profitable. 47 percent were somewhat to very confident about the future. At the time of the survey, hiring was the number one challenge.
For the entire report go to: https://www.guidantfinancial.com/small-business-trends/
Guidant made the effort to gather information on businesses led by people of color. I appreciated their transparency about the demographics of their study. They indicated that 84 percent of the respondents were Caucasian owners of businesses.
The results from the Guidant Financial study were specific about the ambitions and concerns of owners of color.
- 74 percent of diverse businesses want to sustain and grow their businesses.
- In 2022 the number of businesses formed by people of color is flat
- The level of confidence their business will survive the pandemic is about 6% lower than white-owned businesses. An additional 6% of diverse business owners were unsure.
The good news is that diverse businesses want to sustain and grow their businesses. The not so good news is answering the question “What is needed to increase confidence and results that make longevity of their businesses a reality.”
For the complete report go to: https://www.guidantfinancial.com/small-business-trends/people-of-color-business-trends/
Uncertainty is a key topic in my work with the chambers of commerce that serve diverse business owners. Opportunities for growth and profitability do exist. Owners are unsure how to look beyond short-term operations to a future strategy led company and risk management. Owners may not know that methods and tools exist for managing companies facing higher long-term risks. In addition, the costs of advanced workshops are a constraint to participation.
Small business owners, especially those over five years in operations, build their success on doing strategic thinking and action. The investment in advanced skills has been a key success factor for mid-market companies that grow to $20 – 50+ Million or more in gross revenue. Honing deeper skills and building a toolbox for quickly refining strategies, plans and becoming experts in implementation does raise overall company performance and owner confidence. (Harvard Business Review, Mid-Market Growth Strategies, Gary Wolbers and Arun Pillutla, December 2021)
The questions we are hearing from owners and chambers of commerce now are:
- How do I identify the winning strategies or products that will sustain my business?
- How can I afford the high costs of traditional and modern marketing and social media?
- If my financial statements are weak at this point, how do I present a viable plan and forecast that funders will support?
Small businesses can get answers to these questions from many sources. U.S. Small Business Administration and local economic development organizations are subsidizing introductory executive development and some consulting. Owners who are committed to a career in business ownership will benefit from investing in their professional development and a customized set of business methods and tools. With critical thinking, project capabilities and well-honed company methods, growth potential improves and risks are managed proactively. Forecasting consistency and reliability are the keys to acquiring the funding companies need over the business lifecycle to achieve good exits or transfer to future generations.
Charting a path through these difficult time is more than a quick pivot. Future articles will focus on market strategy, planning, transforming operations, funding and implementation. To get started on mapping out the future of your business ere consider the list of the successful strategies graduates of our programs used to recover from the 2008 Great Recession. Many of these businesses are still in operations and growing. The individuals who closed their business made thoughtful choices on new careers.
- Develop new products they were passionate about but did not know how to get it to market.
- Improved their capabilities in marketing to their ideal customers. Created strategic messages and consistent communication.
- Expanded in their existing market sector. Food industry company with specialty in catering opened a restaurant which is doing well in right location.
- Professional services company offers a wide range of products and services. Easily responds to shift in market conditions.
- One individual did not want to continue being a solopreneur in her professional practice. She called on connections to get a senior position in her specialty. She secured valuable contracts internationally. I was pleased to see that she was able to retire.
Successful outcomes in unprecedented times require both well structured and thoughtful business and personal decisions. Do not rush through major decisions. Call on professional and personal supporters and evaluate as many options as you can.
Join our workshop on July 26 to get an introduction to The CraneWorks set of tools for strategic thinking and action. In the future newsletters expect more specifics on the options for finding your path forward.
Contact us for more information on The CraneWorks’ SME programs and advising services.
Enjoy the summer and support a positive future for small and mid-size businesses!
Quote for inspiration:
Remember to look up at the stars and not down at your feet. Try to make sense of what you see and wonder about what make the universe exist. Be curious. However difficult life may seem, there is always something you can do and succeed at.
It matters that you don’t just give up.
Join our Great Decisions Framework orientation session to understand how the value creation mindset is key to creating the winning formulas for your business now and in the future.
Tuesday July 26, 2022
10:00 AM to 11:00 AM PDT