As 2022 winds down, we start looking to next year. From planning budgets to customer growth, how do we get better as businesses in 2023? Here are a few predictions from Kimberly DeCarrera on what we will see in 2023 from smart small businesses.
Smart Businesses Will Go Back to Fundamentals in 2023
The past few years have been a crazy roller coaster. From pandemic era shut-downs to supply chain issues to the Great Resignation, we have all been through a traumatic period. We will now see a reaction and counter-reaction to that trauma and chaos in 2023.
It’s going to be a theme of returning to basic business fundamentals this upcoming year.
Focus on Profitability
Over the past few years, as money has been easy in the forms of venture capital investments and cheap interest on borrowed money, companies got lazy. Many companies were doing things like focusing on top line revenue growth. But this comes at a cost – the hit to the profitability.
Sure, we can go out there and “buy market share” and grow the top line revenue. But are your margins high enough to cover the cost of goods sold plus the expenses of the company? And how much of the revenue growth came from higher prices and not more goods or services sold?
And while the focus has been on top line revenue growth, expenses have gotten out of hand. People have called it “investing” in the future as an excuse to buy up anything and everything. This has been crazy.
Now that the easy money is gone, smart business owners will focus on cutting unnecessary expenses in an effort to maximize profitability.
Kimberly's prediction: The most important financial metric to business owners and investors will be profitability, not top line revenue growth.
Hiring Binges and Now Layoffs
One of the fundamental flaws that we saw the past few years is the assumption that the crazy growth was going to continue forever. But we also know from decades and centuries of experience that the good times won’t roll on forever. We have to come back to earth at some point.
Some people went on a hiring binge without stopping to think if they could sustain all these people. Now, you are seeing these companies having to layoff a bunch of employees.
But smart businesses take the time to look at the “why” – why are we hiring? what is causing the growth? will it continue?
Smart businesses won’t say no to hiring people, but they will take a look at the fundamental business reason for hiring people. And make sure that it adds to the mission and purpose of the company to grow and succeed.
Kimberly's prediction: smart companies will continue to hire smart people. But the companies will do so in a mindful way.
The Best People Will Start Their Own Businesses
Many small and large businesses alike are going to find it tough to get the best people for all sorts of jobs and positions. And that’s because the best people are going to start consulting, freelancing, and otherwise working for themselves.
These awesome subject matter experts are going to be available for hire, but as vendors and consultants, not as employees. Companies are going to have to make a mindset from employment benefits to contracts and vendor management for many positions.
Many of the best people are interested in small business ownership as a response to the whiplashes from the pandemic. We saw companies immediately cut people with the uncertainty of the beginning of the pandemic, over-react and hire too many people and now lay them off again. This is not a good situation for an employee. So the best employees are going to decide to work for themselves.
This means that you may only get these employees on a fractional basis. As they will be working for multiple companies to reduce the risk of any one company not succeeding or providing the work they desire.
Kimberly's Prediction: There will be a new wave of high performing executives and key employees, tired of the corporate rat race, that start their own businesses in 2023.
Renewed Focus on Purpose and Meaning
As we move into 2023, we are going to continue to learn lessons from the pandemic. And this new generation of employees that came of age during the pandemic.
One trend that I am already seeing is a renewed focus on purpose and meaning. I am seeing this a lot from the Gen Z workers that want a connection to the work that they are doing. Also, that they want a true work-life balance that has only been window dressing of the recent past.
Workers are not going to tolerate abusive, toxic workplaces. It’s going to be hard to hire in these businesses. And the most toxic trait of all will be not developing your employees. Smart businesses will be investing in developing their employees and their managers.
Employees are going to want to work for people that they can trust, that are going to develop them as individuals, and that connect them as an employee to a greater mission. That mission will need purpose and meaning – and not just to line the pockets of the owners.
That purpose can be a broad one like “improving the environment” or social justice, but even more narrow purposes. Like this truck is important to keep the supply chain running. Or maintaining this server enables other companies to do big things. It’s going to be painting the picture for employees, and even customers, about the broader purpose for our companies.
Kimberly's Prediction: The smartest companies are going to focus on communicating and connecting their values, mission, and purpose to both internal employees and external customers and vendors.
Smart Companies will Grow in 2023
All the chaos around us and the bad news about layoffs and talk about potential recessions could lead you to thinking that 2023 is going to be a bad year.
And while 2023 may be a bad year for some, it does not have to be a bad year for you!
Smart businesses are going to go back to the basics and focus on making the fundamentals strong. This will put them in a better position to take advantage of the changes in the marketplace. Smart businesses will be able to deliver excellent results for customers and this will attract more customers.
And this is how smart businesses will grow in 2023.
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