By Rafael Colon, Vice President, Small Business Banker, Bank of America, Iowa
Despite economic headwinds, Iowa small business owners are confident in their abilities to manage their businesses through difficult times. Especially with small businesses making up 99.3% of Iowa’s businesses, having access to resources helps small business owners feel confident and may even encourage them to expand.
According to new Bank of America research, business owners are feeling pressure around inflation and supply chain issues, but the majority surveyed (76%) feel well-positions for a strong year ahead.
As an immigrant from Guinea, Africa — Love Adjei, an entrepreneur in real estate of a fourplex and threeplex, as well as CEO of laundry service called Lapa Laundry in Des Moines, is ready to raise the business stakes through her many endeavors and utilizes her resources at Bank of America to do so.
Entrepreneurs are monitoring a handful of challenges to their business plans in 2023, expressing the most concern around inflation, commodities prices, and a potential recession. However, more than half of business owners (56%) reported higher revenue in 2022 than in 2021, and the majority (65%) expect their revenue to increase in the next 12 months. Additionally, 82% of entrepreneurs say they intend to obtain funding for their business in the year ahead, up from 70% last spring, and 34% of business owners plan to hire this year, up from 26% last spring.
So, what do business owners need to keep in mind for 2023? Here are three of the most significant insights, trends, and obstacles businesses should be prepared to face this year:
Labor Concerns and Challenges
Fifty-two percent of business owners say labor shortages are impacting their business, and as a result, many entrepreneurs are working more hours, experiencing issues filling job openings and are modifying their hours of operation. Twenty-one percent of business owners also reported customer losses due to labor issues.
To combat these challenges, business owners are adopting new strategies to retain and attract talent. Over the past 12 months, 51% of business owners implemented additional perks and benefits, including higher base pay for new employees, allowing remote or hybrid work, introducing new employee training options and providing additional healthcare benefits.
Entrepreneurs who have already implemented those changes are seeing their efforts pay dividends—75% of business owners reported that providing additional benefits to retain talent over the last 12 months had a meaningful impact on employee morale and retention.
New Growth Opportunities
Entrepreneurs will need to be creative to grow their businesses over the coming year and tapping into the latest digital tools and resources can help.
Eighty percent of business owners digitally optimized their businesses last year by adopting new tools and technologies, and 49% of business owners plan to incorporate automation and artificial intelligence (AI) tools in 2023. Overall, 90% of small business owners say digital tools helped make their business operations more efficient.
Most business owners are using new technology to accept more forms of cashless payments and streamline payroll and bookkeeping, but digital tools can also help facilitate marketing—nearly half of business owners primarily employ an online or digital-first marketing strategy. Entrepreneurs are also using digital tools to help them stay organized, reach new customers, and implement sustainable business tactics.
Setting the Standard for Small Business
The last three years have forced business owners to adopt a nimble mindset as they try to stay a step ahead. Entrepreneurs who are looking to expand their business operations over the course of 2023 should consider implementing the following principles of an adaptable business model:
- Be Flexible: Today’s business owners are equally creative, optimistic, practical, and aggressive about the business goals they set and where their business is headed. Business owners should review their plans and remain open to reshaping their direction as the year unfolds.
- Be Measurable: By setting specific and measurable goals, business owners will be able to determine the effectiveness of their strategies and identify areas where their plans can improve. Setting objectives can help business owners measure the current and future success of their business model.
- Be Open to Learning: Business owners who commit to learning new skills will be able to better adapt to new challenges. By connecting with fellow entrepreneurs and partners, entrepreneurs can gain valuable mentorship and knowledge on how to grow and better their business.
Whether a small business has been around for decades or is just opening its doors, being a part of an organization like Bank of America, which is committed to providing the resources necessary to operate and grow a business at every stage, makes all the difference.
Rafael Colon, Vice President, Small Business Banker, Bank of America, Iowa