The multi-layered global challenges modern small businesses face are extraordinary. We discuss some of the most pressing ones.
With an 8.5% price hike in March and an 11.2% increase in producer prices from a year ago, consumers and businesses both experience a unique burden: Who will absorb the rising costs of supplies? Amid inflation, U.S. businesses hesitating to raise their prices must pay that difference themselves or be forced to transfer some of those costs over to customers, potentially losing loyal clients in the process.
Moreover, a 2022 Goldman Sachs survey found that 91% of small business owners already struggle with the current economy’s impact on their industries, and 56% say the situation has worsened since the beginning of the year, painting a bleaker picture for the coming months.
Modern small businesses face multi-layered global challenges extraordinary. Following two years of COVID lockdowns, Russia’s war in Ukraine and supply chain chaos, businesses brace for a “menacing” economic storm, Bloomberg reports. In this article, we will discuss some of the most pressing small business challenges today, look at what small business websites are doing to navigate them, and more:
Small business challenges
- Understanding broader economic trends
- Finding customers without being a household name
- Increasing brand awareness
- Workforce woes
- Lack of capital and cash flow
01. Understanding broader economic trends
In March 2022, the Federal Reserve raised interest rates by 0.25%, pushing the federal funds rate to 0.50% and marking the latest interest rate hike since December 2018. According to a 2021 Business.org survey, 82% of businesses have already raised the price of their products or services due to inflation. While some businesses modified their inventory to save on costs, buying the minimum amount of items they can store, many business owners have drastically changed their business model to fit into the new economic order.
Supply chain disruption has become another challenge for small businesses, with 63% of business owners saying they’ve altered their supply chain in the past six months, as reported by the U.S. Chamber and MetLife Small Business Index. Empty grocery store shelves, insufficient supply of everyday items like refrigerators and delayed packages makes it difficult for them to meet customer demand.
The solution: To protect their future, small business owners need to recognize the larger forces at play—understanding how inflation affects small businesses as well as supply chain issues, labor shortages, rising energy costs and other small business trends—and understand what’s driving them. Wix user Avi Cohen, owner of Babu Chocolates, manages rising costs of his raw product by experimenting with new product offerings. He plays with flavors and uses an assortment of ingredients like different nuts so that he never loses quality when supplies are out of reach.
Additionally, honest communication between businesses and consumers might be the easiest way to navigate these broader challenges and could pay off in the long run.
For example, Time magazine reported that some small businesses are being clear about their price increases, telling their customers what’s going on in advance and gaining their trust as a result.
02. Finding customers without being a household name
For 49% of marketers, the primary objective around sales is increasing customer acquisition, released B2B research-based marketing firm Ascend2 in its 2020 digital marketing report. It’s a small business myth that customers just show up. The process of finding new customers can be costly and specifically challenging for smaller businesses that do not have the same budget (and big name) as larger companies.
The solution: Small business owners, self creators and aspiring entrepreneurs have a few ways to attract new clients without being a household name. First, position yourself as an expert in your industry by creating a blog and publishing helpful content that demonstrates your knowledge to potential customers.
Second, optimize your small business website for search engines and further drive traffic and conversion. Along with using best practices like page speed optimization and designing for enhanced user experience, you will also want to track your success by monitoring the right key performance indicators (KPIs).
03. Increasing brand awareness
Having a strong brand is important for growing a business. Increasing brand awareness is one part of that picture, resulting in building a loyal customer base who can recognize your brand instantly out of a lineup and also trust your business to meet their needs. In effect, 46% of consumers say that they would pay more for brands they trust, according to a 2022 marketing survey by Salsify. Small business owners and entrepreneurs can boost their brand awareness using their best marketing tool: their online eCommerce website.
The solution: Start by building an SEO strategy to bring more traffic to your site. This can really help with your business scalability. Then, create a professional and customized logo design with the Wix Logo Maker to feature on your website. On the content side, you can blog, start a podcast, and share social media visuals such as infographics that show off your brand’s expertise.
Part of having a strong brand is a powerful business name and standing out from the get-go. If you’re just starting your next venture, consider using a small business name generator for ideas and inspiration.
04. Workforce woes
Small business owners are in a pinch amid a hiring crisis that stems from the pandemic. “Workers are leaving their jobs in record numbers due to lack of child care, low wages, fear of COVID-19, long commutes, and changing values and priorities,” said Betsy Dougert, vice president of external relations for SCORE, the US largest network of expert business mentors.
Small business owners reported that “hiring the right talent” has been their biggest challenge yet, followed by “retaining or motivating employees.” The Megaphone of Main Street: Small Business Jobs Report also revealed that hiring and retention has been particularly difficult right now since small businesses need to raise salaries and wages to be competitive and attract quality candidates.
The solution: Some small businesses use online recruitment and employment agencies to address their own labor shortage. “Right now, we’re doing whatever we can to attract the workers that we need,” said Traci Tapani, co-president of Wyoming Machine, as reported by the US Chamber of Commerce.
05. Lack of capital and cash flow
Capital and cash flow are a lifeline, especially for those starting a business, giving them the financial support to expand and evolve. The SMB Group, a research, analysis and consulting firm, found business owners in the last couple of years were dealing with unprecedented uncertainty of cash flow and lack of capital.
The solution: Fortunately, there are different ways of obtaining funding, from Small Business Administration loans to private bank loans. The SBA offers a variety of loan programs to help small businesses, including 7(a) loans, 504 loans and microloans. Other methods of funding include finding an investor, venture capitalist or business partner, as well as crowdfunding online.
The next step is maintaining your bookkeeping and proper cash flow management to ensure enough cash reserves to cover business bills and generate profits. Without it, you may not be able to scale.
Nearly half of small business owners handle marketing efforts on their own, reported Fundera, a marketplace for business financial solutions. With smaller budgets than their big brand counterparts, small businesses need to be creative and resourceful about their digital marketing strategy—and many need an online presence to get there.
The solution: Thankfully, the cost to build a website and operate it is relatively affordable. Choose a website plan—eCommerce, event website or portfolio—for your type of business. Then, incorporate additional marketing features to enhance your website, including email marketing, SEO tools, analytics, and different website apps from the Wix app market.
More workers across the board feel worse than they did last year, according to MetLife’s Employee Benefit Trends Study 2022. “Malaise, burnout, depression and stress-all of those are up considerably, Todd Katz, executive vice president at MetLife told the New York Times. Employees and employers alike feel fried in a late-pandemic crisis of productivity and will.
While being a small business owner can be rewarding, it can also be emotionally draining. When you’re “always on” for your business development, paired with the stresses of inflation, rising costs, and the prolonged COVID-19 pandemic, it’s important to recognize the signs of burnout, as per the World Health Organization:
- Feelings of energy depletion or exhaustion;
- Increased mental distance from one’s job, or feelings of negativism or cynicism related to one’s job;
- And reduced professional efficacy
The solution: Here are a few ways to beat ongoing stress, especially for business owners:
- Invest in help to delegate tasks, such as accounting, updating the company website or marketing;
- “Close up shop” temporarily and recharge;
- Take time to celebrate victories, big or small, to keep a positive attitude
- Keep up with the latest technology trends that can help streamline business operations