During the global COVID-19 pandemic, small businesses had to completely change the way they conducted business. From reducing costs to moving to remote work, small businesses found innovative ways to overcome major challenges. This ability to pivot speaks to the resilience of SMBs to define—and redefine—success, even through the most difficult and uncertain of times.
As we set our sights on 2023 and business planning for the new year, let’s take a moment to review 3 of the most significant challenges our SMB customers have been facing in 2022, and their ongoing impact. (And download our guide if you want to see how automating your finances is a practical step towards overcoming these challenges.)
1. The Rise of Inflation
According to the U.S. Chamber’s report, 88% of small businesses are concerned about the impact of inflation on their business. And for good reason. Arguably, inflation is the biggest challenge impacting companies of all sizes, but especially small and medium businesses.
Although inflation rates have remained consistent over the past decade, they’ve skyrocketed in the last year. Per the U.S. Bureau of Labor Statistics, inflation rates for all major goods and services increased 8.3% over the last 12 months, as of August 2022.
Inflation impacts every part of a small business: as prices for material goods, labor, and other services go up, businesses must find ways to offset these costs. Goldman Sachs found that 65% of small businesses have increased the prices of their goods and services to balance the negative impact of broader economic trends. However, this can deter some consumers, who are also feeling the impact of inflation.
Small business owners must find a way to increase cash flow control and the amount of money coming in every month—while also being conscious about the impact that increased prices can have on their target market.
Financial automation can help small businesses gain more visibility into finances to help with cash flow management. Learn how.
How BILL helps our customers with cash flow control:
“I used to spend up to two days a month making payment entries. With BILL, it takes me just two hours to get through all my payments to balance accounts.”
— Crystal Jefferson, Accountant, blinkcns
2. Labor Shortages
During the COVID-19 pandemic, people also started to reevaluate every page of their lives, including their jobs. Many workers with unfulfilling jobs—whether that was because of pay, work-life balance or other factors—quit. This led to the Great Resignation, with over 47 million workers leaving their jobs in 2021.
As a result of the Great Resignation, many small businesses are still struggling with labor shortages. As of August 2022, there were over 11.2 million job openings, according to the U.S. Bureau of Labor Statistics.
Workers are looking for more than just traditional job benefits. Although a significant increase in income/benefits is still important, a Gallup poll found that over 60% of U.S. employees are looking for greater work-life balance and well-being, while over 50% are looking for greater job stability and security.
Small businesses need to consider how best to meet workers’ needs in order to retain current employees and recruit new talent.
In addition to offering comprehensive benefits and other advantages to make jobs more desirable, small businesses can use automation to relieve employees of the burden of repetitive manual work. With time afforded by automation, workers can focus on more fulfilling and business-critical tasks—and find better work life balance. Learn how.
How BILL helps our customers with resourcing to support finance operations:
“Since automating AP with BILL, we’ve been able to repurpose one full-time accounting employee to focus on more impactful strategic work like diving into financial performance and cash flow.”
— Christopher Hopeck, CFO, Millennium Physicians
3. Supply Chain Disruptions
Supply chain disruptions—caused by the COVID-19 pandemic and its aftermath—have impacted businesses of all sizes, but small businesses have taken the brunt of the hit. According to NFIB, 33% of small business owners have reported that supply chain issues have had a significant impact on business, while 32% reported a moderate impact.
Compared to larger businesses that generally place larger orders on a steadier basis, many small businesses place smaller, less regular orders, which can be a deterrent to vendors. According to Software’s SMB survey, 91% of SMB retailers feel larger companies have an advantage over them to procure inventory.
Unfortunately, supply chain disruptions don’t seem to be going away any time soon. So, for small business owners, coming up with a comprehensive strategy—beyond merely raising prices or finding new vendors—-is key to successfully surviving supply chain disruptions.
Small businesses need to find ways to keep up with consumer demands and compete with larger businesses to get the goods and services they need to keep their business running—and their customers happy.
Better control over payments and strong working relationships with vendors can help mitigate the impact of supply chain disruption. Learn how.
How BILL helps our customers pay vendors fast to improve vendor relations:
“Before BILL, we were spending 20-25 hours a week just writing checks and managing our essential AP functions. We needed a way to pay vendors faster.”
— Amy Bennett, Accounting Specialist, Galileo Learning
Despite the many challenges SMBs have faced in recent years, they seem to be cautiously optimistic about the future. According to NFIB, the number of small business owners who expect better business conditions over the next six months increased 10 points, the highest that optimistic sentiment has been since February 2022.
More and more we see small and midsize businesses turning to technology, specifically finance automation, to overcome these—and other—challenges … and prepare themselves for whatever new challenges may arise in the new year and beyond. According to a recent Salesforce Report, “71% of SMB leaders say automation capabilities are an extremely, very, or somewhat important consideration when shopping for new technologies for their companies.”
Whether it’s seeking out new technology or some other innovative tool or strategy, small businesses continue to do what it takes to survive and thrive. As BILL CEO René Lacerte puts it, “SMBs have proven their resilience and problem solving DNA” and “when they flourish, it strengthens our communities and the economy overall.”
To learn how automation can help small and midsize businesses overcome these challenges, read Solving Small Business Challenges of 2022 with Automation.