Small Business 2022 Outlook
As we head into 2022, many small business owners have a lot on their minds. Will the new year be one of uncertainty or recovery? Will consumers continue spending? Will employees be on the lookout for another job?
Similarly, aspiring entrepreneurs have a lot of questions too. Is 2022 a good year to start a business? They, too, are concerned about consumer behaviors and the mood of the country.
SCORE has some good resources to help CEOs to look toward next year. One of our content partners, Rieva Lesonsky has contributed a comprehensive look into this topic. She is president and CEO of GrowBiz Media, a custom content and media company focusing on small business and entrepreneurship, and the blog SmallBusinessCurrents.com. I share some of her insights in this column.
Startups will continue to soar.
The just-released QuickBooks New Business Insights report, commissioned by QuickBooks’ parent company, Intuit, has some answers for us, and you may find some of them surprising. For one, 83% of those surveyed say the COVID-19 pandemic influenced how they want to work and accelerated their startup plans.
According to projections, based on the U.S. Census Bureau data of Employer Identification Numbers (EIN), it’s expected 17 million businesses will launch in 2022. About 5.6 million of them will hire employees. (Consider what that means for the number of jobs likely to be created in 2022.) This will smash the record-high 4.3 million businesses that started in 2020.
And 57% of survey respondents admit to dreaming of one day owning their own businesses, primarily driven by a desire to “be their own boss” and “to have more control over their future.” To fund their startups, 67% will use personal savings.
Supporting small businesses.
Public sentiment bodes well for these new businesses—86% of consumers believe small businesses are “crucial to the economy,” and 57% say they will spend more money at small businesses in the next six months. These consumers not only want to help local companies, but they cite “enjoying the stellar customer service they get” when they shop small. Add this to the 50% of surveyed consumers who report they’ve already spent more money at small businesses.
New Priorities for 2022.
A separate survey, the QuickBooks Small Business Insights report, reveals some new priorities for small businesses in 2022.
- Pivoting to online: 88% say online sales will be an “important source of revenue next year,” and 97% say digital tech will be “important” as well.
- Whether you’re a startup or have been in business a while, a robust website is a must-have. And as we’ve previously noted, social selling has been a boon to small businesses. The report says revenue from social media accounts for, on average, 33% of small business revenue. Plus, brick-and-mortar businesses report getting 22% of their sales from social media.
- Fighting inflation: 97% of small business owners are “worried about inflation and 45% say “rising costs” is the most significant threat their businesses face.
- 63% plan to raise prices in the next three months to combat this
- Attracting/retaining employees: 44% of small businesses plan to hire over the next three months. Small business owners can take advantage of the Great Resignation by highlighting the benefits of working for a small company. The small business employees surveyed say having a “close relationship” with the owners of the business and a sense of belonging to the company are their top reasons to prefer working for small businesses.
To attract and retain employees, business owners plan to:
- Increase pay to attract new talent (44%) and pay their current staff more (46%)
- Offer larger bonuses to current employees (36%)
- Hire younger workers (30%)
- New business practices
A survey from Xero, a small biz accounting software platform, reveals that many small business owners plan to change their behaviors in 2022, particularly in these four areas:
- Spending: Many businesses cut back on spending this year. But many plan to start “judiciously” investing in their companies again in 2022. However, they expect it to be challenging to find the money to make these investments.
- Buying habits: Due to the challenges dealing with their supply chains this year, businesses plan to buy earlier than they had before. And they want to expand their supply chain to new suppliers. They also plan to have less inventory on hand.
- Mental health: 40% of small business owners worry about their mental health, and about the same number are concerned about their employees’ wellbeing. According to the Xero report, this is so concerning to the small business owners that they will do “anything they can” to get themselves and their teams on an even keel.
- Debt: 56% of the businesses surveyed still face cash flow pressure, but they are determined not to let debt become “an unhealthy dependency.”
If you plan to start a small business in 2022 or need help setting your priorities for the new year, contact a SCORE mentor today!