As I look forward to what I predict for 2023, I need to first look back. 2022 was a very strange year for small business predictions.
It’s the year we turned perhaps the corner on COVID but then went head first into higher inflation and war in Ukraine. While I got some of my small business predictions right, I was totally wrong on the bigger economic picture.
Here were my predictions for 2022:
What I predicted: The COVID pandemic will continue. In March of 2020, I said the pandemic would last 3 years and unfortunately, vaccine reluctance will not short circuit this event. We are now in year 3 and in 2022, the U.S. will reach over one million deaths. Annual boosters will continue (can you say 4X?) for this next year.
Hit: COVID is still with us and few of us are still getting boosters.
What I predicted: Inflation will continue, but at a slower 4% rate with the Fed increasing interest rates. This means you need to raise prices now.
Miss: Inflation was at 7% in 2022. I did not predict that Russia would attack Ukraine spiking oil prices and further disrupting the supply chain. The Fed did increase interest rates…a lot to combat this.
What I predicted: The stock market will rise by 7%.
Miss: With inflation, the market dropped by over 10% this year.
What I predicted: Supply chain issues will continue into the new year. The mess in global transportation especially with new variants will not be resolved.
Hit: it’s still a mess and prices continue to rise.
What I predicted: Staffing shortages will still plague small business. Employees will demand a work-life balance. The HR role in every company will become more important in attracting and retaining team members.
Hit: Until the last few months, people have been very difficult to find. Most employees are demanding to work from home some of the time. Retention is a key focus for all businesses.
Here is what I predict for small business for 2023:
- The stock market will rise by 5% but still be below its 2021 level as the Fed reduces its rate increases. Downward pressure is still on the market.
- Inflation will remain at about 5% as the war in Ukraine rages on keeping energy prices high. As a small business, this means you will need to raise your prices again in 2023 and focus on reducing costs. During these time, you need to prioritize profits over growth.
- GDP will shrink two consecutive quarters signaling a recession. Now is the time to watch your cash flow and ensure you have enough operating expenses in the bank for the recession.
- The unemployment rate will rise. Now is the time to find the best people for your small business. Focus on the relationships with your employees to keep them loyal.
Other predictions:
- Small business will struggle with the cost of online paid advertising as the economics no longer work. They will rely increasingly on SEO.
- Elon Musk will send Twitter into bankruptcy. Small businesses will continue to look for other social media channels.
- The “Meta-verse” for most small business customers still is not “a thing”.
- Tech companies will continue to see low valuations and be difficult to sell for cash only . Main street home services businesses with steady cash flow will increase in value. The focus will not be on fast growing businesses but profitable ones.
- The crypto winter continues. If you want to get in at the bottom, now is the time.
- Employee lawsuits will continue to rise as a way to get money from small businesses post-employment.
What you need to focus on for 2023 is to run profitably and sacrifice growth if needed.
What do you predict for 2023? Let me know how I can help plan a great year!
