After 2021’s COVID challenges and 2022’s inflation, labor, and supply chain problems, you as a business owner may wonder what 2023 has in store for you. Most entrepreneurs are staying resilient and optimistic. A recent survey revealed 66% of small-business owners believe their revenues will grow in the next 12 months and 52% expect to expand their operations. A survey of midsized businesses found most believe profits will rise and expect to add or keep staff, while a third say supply chain issues have improved. Nevertheless, nearly two thirds think a recession is likely this year and 91% report their costs are rising, as inflation continues to be an issue. Here are the business trends analysts say business owners should watch, along with some things you can do to ensure your continued success.

Inflation will remain an issue

Most economists do not expect the Fed to get inflation down to its target 2% rate before the end of the year. A smart way to deal with rising prices for goods and services is to look at ways to boost efficiency and save money. Review your shipping procedures, explore ways to improve your building’s energy efficiency, think about buying electric vehicles.

The cost of doing business will keep rising

In addition to added costs for labor, supplies, and outside services, look for price increases in insurance and software. The Council of Insurance Agents & Brokers says costs are still rising fast, particularly in cybersecurity and property insurance. With the rise in the frequency and severity of natural disasters and digital security breaches, these insurance costs could keep increasing even if inflation abates. With small business software, some providers will increase pricing, others will change what they offer in base plans, trying to get you to upgrade to a higher-priced agreement. Now is the time to examine all your operating expenses to find areas where you could save money or cut costs by switching to an alternate product or service. Carefully compare pricing and features from competing vendors.

Borrowing costs should stay high

Because inflation should stay with us for a while and the Fed is fighting it by raising rates, expect high interest rates and a tight lending market to persist. As an alternate funding source, seek out business grants. Start by checking the possibilities with the Small Business Administration office in your state. Apply for credit cards with rewards your business could use. Choose business credit cards that take balance transfers and/or offer a 0% introductory annual percentage rate.

Some banks will offer businesses more

Many banks will be dialing up their marketing efforts—offering higher interest rates on checking and savings accounts and business-friendly features. In an increasingly crowded space, brick-and-mortar banks, online banks, and neobanks that operate exclusively online will be competing intensely for customers. Could your current bank be doing more for your business? Look for business accounts with lower fees and integrated tools, such as invoicing and accounting software. Switch to higher-yield checking or savings accounts so you can earn interest on your funds. Choose the bank whose services add value to your business.

The tight labor market is likely to continue

Business owners will need to offer benefits that will attract workers. Many want flexible time off and hybrid schedules, to work both at home and on premises. Consider offering mentoring programs and other growth opportunities.

Customer communication will be key

Restaurants, online businesses and brick-and-mortar shops all need to engage with customers on social media. This is especially important if you need to raise prices or change the hours you’re open. All businesses will find success in doing a better job of communicating with their customers. It’s OK to talk about your struggles with inflation—your customers are facing the same challenges. Always be clear and stay proactive. Find out the communication channels your customers frequent and what they use them for, then meet them where they are.

To learn more about these trends or to discuss further contact your AdviCoach.