With a new outlook and hopes on the horizon for a better economic future despite the reported gloom and doom, 2023 is shaping up to be an engaging year as numerous small businesses are bracing for economic uncertainty with a looming recession and inflation – yet they are now more equipped than ever.
With a MetLife and the U.S. Chamber of Commerce report showing that 85 percent of small business owners surveyed are concerned about inflation, fear of the unknown can be a big factor keeping these companies stuck in a rut of stagnation preventing growth and vision for this year ahead.
Small business owner Desi A. Johnson II, CEO of Des2fit Fit Corporate Wellness and Des2fit, told the Michigan Chronicle about how, especially over the past several years, he keeps his company afloat through checks and balances even during COVID-related economic setbacks.
Des2fit Fit Corporate Wellness was established to inform businesspeople in America about the newest health trends, assist organizations in lowering healthcare expenses, increase employee productivity, boost morale and prioritize wellness in their workplace cultures.
“We were able to become a recession-proof organization because my company invested heavily in technology; we have become laser-focused on our niche market and we were able to quickly adapt to deliver to our corporate and individual clients due to the uncertainty of the pandemic,” Johnson said of the work that he and his wife, Victoria Johnson, put in.
According to reports, Black-owned businesses, however, are also still thriving and ownership s up 28 percent compared to before the pandemic.
U.S. News & World Report related that 1.2 million African Americans were self-employed in 2022 compared to 1.1 million in February 2020.
The biggest increases in business formation came from cities with large Black and Hispanic populations including Chicago, Detroit, Los Angeles, Houston and Miami.
Despite the difficulties, 70 percent of CEOs claim that their company is doing better now than it was before the pandemic. In addition, 55 percent of executives predict that the Michigan economy will remain the same in the coming six to 12 months, 22 percent predict an improvement, and 24 percent predict a decline; 43 percent predict that the U.S. economy will remain the same, 28 percent predict an improvement, and 28 percent predict a decline.
According to the U.S. Chamber of Commerce, being adaptable while enduring the storm is the key to recession-proofing a company, especially with business tips that include:
- Embrace adaptability and be able to pivot.
- Cut unnecessary costs and look at expenses and cash flow to help plan for your financial future– and avoid overspending.
- Keep in touch with employees.
David Cody, co-founder and co-CEO of NEWITY, a service provider for small businesses and the largest independent processor of the Paycheck Protection Program, recently told the Michigan Chronicle that the country’s economic environment today shows the need for even more access to capital.
According to nerdwallet.com, access to such capital is sometimes tricky with disparities plaguing small business owners as the ever-widening racial funding gap shuts Black business owners out more often of loan approvals. If they are approved it is not as frequent and at times for lower amounts with higher interest rates. However, capital is still a necessary part of the business.
“[It] provides people with an opportunity to help kind of bolster their business,” Cody said, adding that growing a small business does not happen overnight and tools to equip owners with the next steps are key. “Every small business is different.”
Cody also provided a rundown of the three dos and don’ts for small businesses in 2023.
- Embrace Financing Alternatives: SBA 7(a) loans are overlooked, but they can help to increase purchasing power for operational expenses and gain access to more affordable capital for payroll, rent and utilities.
- Reduce Tax Liabilities: Reviewing tax incentives can uncover hidden savings based on existing operations, including the Employee Retention Tax Credits — which is misunderstood even by many tax professionals.
- Continue to invest in growth.
- Ignore your balance sheet health and cost structure.
- Be surprised by the revenue slowdown.
- Trim Marketing Initiatives: Instead of cutting back, savvy owners should be strategically increasing their marketing and outreach spending during a recession.
Knowing the issues that were present last year can give savvy business owners the guidance they need for the new year.