A month into 2023 and we’re already seeing some new issues to pile onto those that have crossed over from 2022. Most small business owners are already up to their necks in planning how to mitigate next week’s issues, but what about preparing for the rest of the year?. Planning ahead as a small business owner is a luxury rarely afforded. Especially in this new era of unbelievably fast globalization and interconnectedness, keeping track of current events means being a world news expert. While business leaders across the globe have already posed their thoughts on the state of the new year’s economy and job market, it is perhaps even more valuable to hear from the people living the small business reality day in and day out. Consider, then, these collected hypotheses from real small business owners and thinkers about what they (and you) ought to be aware of pushing further into 2023.

Economic Slowdown

In today’s market, one business’s slowdown is another’s ramp-up. Consider, then, the prediction and recommendations of Stacy Elmore, the Co-Founder of The Luxury Pergola, SEE Home Improvements, and LouveRoof Luxury Pergolas. Her business keenly knew that consumer spending had changed and was determined to beat the trend.

“For our business, we are seeing a rapid slowdown in the economy. We’ve had to shift our product from a “dealer focused” distribution model to a direct-to-consumer DIY product. The reason for this is that with home equity (for many) shrinking, consumer debt rising, and retirement accounts shrinking. We are noticing more people prioritizing necessities in their spending, and luxury products are the first to dip in performance.

“Locally, our installation of Louvered Pergolas is down, so by supplementing with a DIY kit, we’ve seen our sales improve. I expect revenues to drop for small businesses across the country until mid-2023. As interest rates rise, expensive products (that are financed) will continue to drop in gross revenue. Businesses have 2 options: Either raise Prices (but have lower volume) or pivot to grow revenue. Unfortunately, many businesses don’t have many, if any, places to pivot. It’s best to get creative.”

Stacy Elmore, Co-Founder of The Luxury Pergola, SEE Home Improvements, and LouveRoof Luxury Pergolas

The Future of Advertising

As a business owner, you make the decisions that affect not only your livelihood but that of your employees. Small business co-owner and small business consultant Chris Glarner has abundant experience dealing with strategic cuts both in his own business and those he consults. Glarner poses that the rules of the game are likely changing for advertising, especially for companies with smaller budgets. 

“The livelihood of business owners and their employees directly relies on the owners’ decisions, which makes each decision and outcome a personal one. For some, fear tends to rule, and the fear of poor economic conditions is causing hesitancy in moving forward with key projects and investments.

“More specifically, marketing and advertising are already being discussed as one of two key areas to make budget cuts. The top priority for budget cuts is, of course, “non-essential” expenses.

“Microsoft has sent us offers to “Spend X dollars, get 2X dollars free” to start or continue running ads. We have seen pay-per-click ads decrease in cost by 9% in November – December compared to the two months prior.

“By cutting advertising and marketing, especially in online advertising such as PPC, the cost of advertising in certain markets will likely decrease. This will drive a higher ROI and grow market share for the businesses that have the funds and are willing to continue investing in growth through 2023. These businesses will be in the best position to thrive in 2024 and beyond.”

Chris Glarner, Business Consultant

Smarter not Harder

With economic changes and restrictions, small business owners have found increasingly inventive ways to keep above water. And going into 2023, small business owners will likely have to double down on cost-saving that is more unexpected and creativity-driven. This financial awareness is the mindset of business growth specialist Ryan Niddel, who, along with his prediction, has an abundance of practical advice for business owners preparing for the new year.

“For many companies, 2023 will be a pivotal year in which we will be forced to handle the crisis of a potential global recession. I have taken the stance inside of my company, MIT45, to shore up the vulnerabilities that could create issues during a crisis season, and I would encourage other business owners to do the same.

“What we have done is to buy as deep as we’re able to in all material goods. This prepares us for the potential of increased expense not only on physical goods, but also on transportation. We have pulled back on wasteful spending. Wasteful spending is the creep that happens over a period of time of continuity billing on software services. It is not to eliminate fringe benefits for employees. We have also gone through our employee roster and instead of cutting back, we have encouraged personnel to exceed our expectations so that the yield that they produce is above a level that justifies their employment.

“These are all ways to prepare for an impending crisis in 2023. It becomes paramount that we go through the four Fs in a crisis – we get stuck in feelings, which is the second half, but we must first get clear on the facts that created the feelings. Once we acknowledge the feelings exist, we get clear on the facts that created them. Then we can pivot and look to the future and determine where we want our focus to go. Once we determine our focus, we can see what the fruit of our focus is. This is a simple exercise to manage the emotional response that happens during a crisis season.”

Ryan Niddel, CEO and Founder of Ryan Niddel Strategies

Cyber-Security and Cookies

It’s no news that digitalization will continue to reinvent the business landscape going into 2023. But what can small business owners expect to change, or in what ways will they have to change to keep in-toe with digitalization? Brian David Crane, e-commerce business expert and owner of several successful enterprises has very clear advice.

“2022 was a year of cyber hacks and scams. As phishing attacks and identity thefts rise, more and more businesses are compelled to rethink their data security protocols. Data security is the next frontier, and the growing relevance would mean more investments and focus on Cybersecurity.

“Without third-party cookies, consumers will have more control over their data as more intrusive ways of data gathering come to an end. Marketers will be limited to gathering data from direct sources like surveys, community polls, direct mail, mobile notifications, SMS answers, and sign-up forms. I also believe that businesses’ marketing spending will increase as they find novel ways to access first-party data and implement it productively. In a world without third-party cookies, the focus would be more on personalization as companies find creative ways of getting to know customers’ needs and pain points at a more granular level.”

Brian David Crane, Founder of Callersmart

A Stronger Year for All Businesses

While no two businesses will have the same 2023, the hope is that every business will have a better 2023 with the right mindset and education. Business owners who fully prepare and insulate their businesses  have the most to gain. So spend 2023 not with the doomed chant “recession, war, defeat,” but instead think locally and insularly! Control and protect the enterprises you know best, and the rest will fall into place.

As the tides come in on another annual tax filing deadline, there is perhaps no better time for small business owners to reevaluate their current tax record management structure. An outsider may not realize how much work goes into managing and maintaining tax records for a small business but those in the know are all too aware how quickly paper files can turn into a Himalaya-sized hassle. The advent of digital tax filing tools has doubled as a great means to store those same records but there are more than a few reasons why digital records can become a chore in themselves.

An essential element of modern financial literacy (especially for small business owners) is maintaining a trusted system for storing and tracking your own tax records. A good system is also easily accessible whenever reason requires. Consider, then, this collection of methods and tips before next quarter is already at a head.

Going Paperless

You’ve certainly heard it before and will hear it again before long: it’s time to go paperless. Going paperless is more than a clutter-reducer; by having less papers spread among less places, there is an equally lesser chance that documents disappear by incorrect filing or plain old human error. While initially overwhelming for most small businesses, crossing the peak into fully paperless document management makes life easier for your business if you file digitally or even with a CPA; it is entirely likely that the CPAs you may consult come tax time already have their own paperless system in place. By carrying your relevant documents on a flash drive instead of a shoebox and a few filing tins, you may just be doing your CPA a favor. Going paperless for your essential documents is a full enough topic on its own that it deserves some sub sections:

Document Management System: Running a secure document management system is a nonnegotiable must when switching to fully paperless records. Here is the flipside all paperless considerers should, well, consider: Your document management system is the digital safe that protects your every essential document; don’t go for cost-savings and don’t cut corners: if this system fails or unexpectedly suffers a breach, I don’t have to explain what bad things can happen next. Evaluate your current tech loadout. If you are running a local server that is fully offline and, thus, more secure, this is a more than sufficient directory to store scanned and wholly digital files until they need to be retrieved.

If servers are too costly for your business, look into cloud-based accounting software. The most well-known example of such software is QuickBooks by Intuit, also the operators behind TurboTax. These systems store and organize files in a near-identical means to local storage but can also be retrieved when you’re away from your master file. Plus, if your business is small enough or manages few enough files to confidently file fully digitally, QuickBooks is fully integrated with TurboTax allowing a one-stop document management and tax filing system. For reasons we will explain later, however, there are more than a few reasons that even if you are confident in your ability to self-file, working with a CPA can still be beneficial.

Cataloging Old Documents: Depending on how long you’ve been in business, the process of digitizing and cataloging your old documents can range from no-trouble to a lengthy ordeal. If your printer has a scanner function, you’re already equipped to do most of the work from your office. Luckily, there are several apps and programs that can use your smartphone camera to do the same work as a scanner. Since such apps will be scanning your essential documents, it pays to triple-check the legitimacy and security of the service you plan to use. Digitizing old records is also a thoughtful alternative to discarding records that have passed the retention mandate; records that are over seven years only are a good place to start digitally downsizing.

Co-Management with Your CPA

There are several industries, however, where going fully paperless either makes work more difficult or costly. This simply means that the documents, receipts, expense reports, etc. for your business must be stored by a method convenient for you. If you work quarterly with the same trusted CPA, it is likely reasonable to split your files (or maintain copies of) relevant files between your two offices. Your CPA can also advise you on the essential record retention mandates relevant to your specific field and filing status. Being that essential financial documents for your small business may include personally identifying information about you and your employees, be certain that any files you leave on record with your CPA are equally (if not more) protected and secure compared to your own record security system.

Stepping Up Security Online and In-Person

The financial documents you maintain for your business are considered essential for a reason; if those documents were stolen or compromised, it may not be just your business at risk. Your employees, as well as any contractors that were directly paid by your business are likely personally identified in your essential documents and identity thieves are aware of this. And as you’re likely aware, identity thieves aren’t safecrackers and cat burglars; they are the digital prowlers, constantly vigilant of unprotected infrastructures with easily accessible SSNs to flip for cash. It is then paramount that every “what if” of your security structure is hammered out.

In-Person Security: The rules for in-person security of your documents luckily haven’t changed much in the past 50 years. The most meaningful way to increase security for your physical documents is to keep them somewhere locked (preferably a safe, not a flimsy locked filing cabinet drawer). Second, know with unimpeachable certainty who has access to those secure documents; reduce the number of people who interact with those documents as much as possible. Only relevant, trusted employees should have access to your essential documents. A modern security element to consider is motion detection modules on the hinge edge of your safe or document holding area. Modern modules can even connect to an app on your phone and inform you directly if some amount of motion is detected. Essentially, treat documents bearing SSNs or other personal information with the same gravity as cash itself; thieves want it just as bad.

Digital Security: If you are on the road to paperless documentation, it’s worth knowing that those digital files are just as attractive as the physical ones. Plus, there are infinitely more methods of egress for cybercriminals to test. If your files are stored on a computer with Internet access be certain that you have an external (cloud-based or local) back-up of those files. In the event of a ransomware attack, those files could be irreparably encrypted. The best way to securely store digital files is on a wholly offline local system with semi-regular back-ups. Since nearly all small businesses file taxes quarterly, it’s sensible to pair back-ups on that same schedule. Hard drives and even modern solid-state drives all fail eventually; so, like paper records, it pays to have extras and back-up copies.

Every Management System Has Room for Improvement

The most effective file management systems are in a state of constant improvement. Whether your records are paperless, paper-ful, or somewhere in between, it pays to regularly shake up your management system both to keep intimately familiar with the where and how of your most essential records as well as to take advantage of cutting-edge trends. Especially for small businesses who don’t have the luxury of in-house accounting and legal departments, being the master of your finances and the keeper of an organized collection of records is the cornerstone of financial literacy.

Small business owners have several high-quality options when it comes to shipping orders. In those options, however, lies a good amount of indecision that near-every small business owner likely faces before settling on one carrier over the other. On the surface, each carrier performs the same task but, especially for small businesses, there are more than a few reasons why one carrier may be a better fit for your products or your customers. Each small business owner weighing the pros and cons of the primary domestic postal carriers in the United States is bound to treat certain pros and cons with different gravitas. Therefore, if a certain carrier appears to suit your needs best, investigate on the carrier’s website or speak to one of their merchant representatives, as several postal carriers are ready to work out specific deals with small business clients.

USPS

Pros:

Often the Cheapest: For small businesses who ship small or infrequent packages, the USPS will likely have the best deal for you. First Class Mail postage applies to most packages under 13 ounces and if you are shipping books, media like CDs, or educational materials, Media Mail postage is an admittedly slower but genuinely unbeatable deal starting at $1.91 if posted with commercial pricing.

Free Pick Ups: The USPS offers free, unlimited pick-ups for any number of parcels which is a deal you will not find with any other carrier. If parcels already have postage attached, the USPS will pick up your packages at nearly any domestic address.

First Class Mail for Letters: If you are shipping parcels small enough to fit in an envelope like stickers or novelty stamps, the USPS is undoubtedly the most convenient means to ship your product. If your product weighs less than 13 oz and is small enough to fit in a standard envelope, it is worth investigating if you can take use First Class mail for letters. For the price of a USPS Forever Stamp or Extra Ounces Stamp, you can ship your product to nearly any address (even internationally).

Cons:

Generally the Slowest Carrier: While USPS shipping speeds have notably increased in recent decades, they still lag considerably compared to other carriers. For example: packages shipped from USPS Parcel Select are guaranteed to reach their destination within 7-days nationally while UPS offers 4-day maximum shipping for the same size parcels. The same can be said when compared to premium carriers like FedEx and DHL. That slower speed, of course, comes hand in hand with lower prices.

Limited Tracking Information: USPS tracking updates only show the most basic “proof of scan” tracking updates which can be especially unhelpful if a package is delayed; services like media mail can sometimes go unscanned for several days at a time. If your customers expect a premium amount of tracking information or you would like to use tracking information in a mix with your own customer support, USPS may prove insufficient compared to other carriers.

Comparably Poor Customer Service: While the USPS will happily flood their customer service webpage with links and resources, getting the information you need when a package goes missing can be incredibly frustrating with the USPS. Intercepting a package with USPS is famously like trying to catch a salmon going downstream; even if you get it to happen, it’s more likely good luck rather than good service.

UPS

Pros:

More Expedient Shipping Options: Small businesses who partner with UPS can take advantage of the carrier’s several quick delivery options like same-day shipping. While these services are generally more expensive, that shouldn’t matter unless your business offers free shipping. Giving your clients the option for overnight shipping can both help those clients in a pinch and help your business appear more reliable.

Heavy Parcel and Freight Accommodations: Unlike the USPS whose weight limit for most mail is 70 pounds, UPS lets merchants ship items up to 150 pounds with some further exceptions as well. Those exceptions being freight delivery. It is exceedingly simple to get a quote from UPS for freight services which can be incredibly helpful if you have foreign offices or frequent foreign orders.

Cons:

Pick-Ups Cost Money: Even if UPS is attractive to your business for speed or weight accommodations, any kind of financial advantage to using this carrier will shrink if you plan on scheduling pick-ups at your business. UPS charges $6.80 for same-day unscheduled pick-ups and $5.80 for scheduled future pick-ups. Having an efficient shipping schedule, however, could make this cost much less of a burden.

Higher Shipping Cost Than USPS for Similar Services: Unless you are taking advantage of very specific shipping methods like UPS Express Critical or Next Day Air, UPS offers services that are near-identical to their USPS counterparts; the only difference is that USPS is consistently a touch cheaper. Here’s a general breakdown: UPS Ground currently starts at $8.76 and delivers within 6 days to any domestic location. USPS Retail Ground starts at $8.50 and delivers within 7 days domestically. While $0.26 is a small difference, that difference reflects the minimum price for both carriers, so that space will only widen as the size, weight, and distance to your destination increases.

FedEx

Pros:

Top-Notch Parcel Tracking: Any business that has worked with FedEx in the past will likely rave about both the simplicity and level of control possible in the carrier’s parcel tracking system. From a merchant’s account, businesses can monitor packages in real-time and even hold packages in transit if a customer cancels an order.

Premium Customer Service: There must be something about companies with the word “Express” in their name because like a certain “American” company which shares the word, Federal Express has a comparably hands-on and empowered customer service team. FedEx is very enthusiastic about their Quality Driven Management (QDM) system which is the mantra behind both delivery and customer service in the company.

Volume Rate Deals: While UPS also deals in freight services, FedEx has an even more robust group of shipping options, several of which can be lucrative to small businesses. For example, non-urgent deliveries and less-than-truckload deliveries can fill unused truck space for a discount. Also, quotes can be determined on a case-by-case basis meaning your shipping deal can be tailor-made specifically to your capacity.

Cons:

Smallest US Retail Presence: Compared to the USPS and UPS, there are fewer physical FedEx locations in the United States, and they are especially sparse  in rural areas, meaning that drop-offs and other services are more likely to be inconvenient for small businesses compared to other carriers.

Complicated Pick-Up Pricing: Taking advantage of FedEx’s pick-up services to your financial benefit is much harder than when working with UPS or USPS. If you would like to schedule a regular stop for FedEx Ground pick-up, their policy is that pick-ups cost “$15.50 or $31 per week: Based on whether the previous week’s total charges on FedEx Ground, FedEx Express and FedEx SmartPost® are over or under $75.” Further, same-day, next-day, and future pick-ups scheduled individually are all $4 per package.

DHL

Pros:

Robust International Shipping Options: DHL has simply the most robust options for shipping parcels to Europe, South America, Australia, Asia, and even large sections of Africa. If you have customers, or a large portion of orders shipping to non-domestic customers, having DHL as a shipping option is both a convenience for you and the customer, as DHL is consistently one of the most efficient carriers when passing customs.

Free Pick-Ups: Back again! Standing side-by-side with the USPS, your small business can schedule pick-ups with DHL for no additional fee. DHL, however, will not accept furniture, household goods, or personal goods at pick-ups; in essence, don’t use DHL instead of movers when you change offices.

Impressive Money Back Guarantee: U.S.-based paying merchants are subject to a full money-back guarantee for shipments that do not meet their destination or even deliver late. This guarantee, of course, does not extend to unusual customs delays or inaccurate shipping information-related delays.

Cons:

Even Smaller US Retail Presence: Unless you are in a major US city, you may have genuine trouble finding a brick-and-mortar DHL location. This, however, will not affect your eligibility for DHL pick-ups, but if you ever need to speak to a representative in person or use in-person services, you may need to make a day of it.

Several Surcharges: As to be expected with a carrier that focuses on international mail, there are several surcharges for small business owners which could affect their interest in partnering with DHL. For example, packages shipping to Afghanistan, Belarus, Myanmar, Zimbabwe, Russia, and Lebanon from locations international to those countries are subject to a $30 Exporter Validation surcharge. Further, countries that DHL determines to harbor a higher risk for their mail carriers are subject to a $20 surcharge. DHL’s list of high-risk locations is regularly updated to reflect international discourse.

Several Solutions, but Only One for Your Business

In the United States, we are lucky that each of our primary carrier options are reliable enough to consistently deliver packages. Finding the best value for your business is as basic as closely analyzing each carrier’s systems and finding the one which best synergizes with your own. There is nothing inherently wrong with any of the above carriers and it is more than conceivable that one carrier could be a financial watershed for one business and an unnecessary expense for another. Finding the right carrier for your business may also include getting in direct contact with the carriers you are most interested in; some carriers like FedEx are known for making deals for long-term clients.

Maintaining a positive cash flow may be the most important task for your small business, but to do that, you’re going to need strong and well-organized inventory management. 

Ideally, good inventory management is the part of the supply chain that will allow you to always have the right product available at the right time and in the correct quantity. 

Inventory control, however, can easily spiral into a mess due to poor planning and the ongoing supply chain disruptions being caused by the COVID-19 pandemic. To prevent your inventory situation from getting out of control, your best bet is to practice the basics when it comes to inventory management, as well as possibly stocking up on your most popular products as the current inflationary environment and supply chain shortages worsen. 

Inventory Management Options

A barcode scanning system can go a long way in practicing good inventory management.

You may wish to consider an inventory management system that utilizes barcode scanning, as that will give you a way to easily monitor your inventory. There are plenty of great software packages out there to help you with this. As we move into 2022, now is the perfect chance to take the right steps to make sure you have a handle on your inventory to ensure the financial health of your business. 

If your budget allows, you may want to hire an inventory manager or stock controller who will be responsible for processing all customer orders, receiving deliveries and making sure that your business receives all of the inventory that is ordered. The inventory manager should know how much inventory you have and be able to conduct inventory valuations at any given time.

Is Dropshipping Right for You?

Dropshipping is an inventory control method in which the manufacturer or wholesaler is responsible for shipping the products once your customer buys the product from you. This will allow you to avoid keeping products in a warehouse or storeroom and is often used by online stores. This method can be used across multiple industries.

Be forewarned, however, that there are some definite drawbacks to dropshipping: this method will result in a lower profit margin, as the manufacturer or wholesaler will demand a cut of the cost of the product, and you won’t be able to offer rock bottom prices. Also, you will have no control over the cost of shipping or quality control, as the product will never touch your hands before they are shipped to your customer. 

Conduct Accurate Sales Forecasting 

Sales forecasting is crucial to good inventory management – knowing how much inventory you need at any given time is especially important in the current economic environment, as supply shortages continue to plague businesses due to the COVID-19 pandemic. Given that inflation is at its highest in 50 years, you may even want to order excess inventory of your most popular items before it gets much higher.

Sales forecasting uses historical data, industry trends, and the status of your current pending sales to predict – with reasonable accuracy – your sales volume on a weekly, monthly, quarterly, and annual basis. Sales forecasting can get tricky, but there are plenty of sales forecasting software packages out there to help you. If you want to do it on your own, here are some steps you should take when forecasting sales: 

• Determine your sales cycles. Many small businesses rely on seasonal sales, so it’s important to document what times of the year you close the greatest amounts of sales. It could be during the holidays. If you sell stationery products, it could be during the back-to-school season; if you sell pool products, it could be around Memorial Day. This will be key in figuring out when you need the most inventory.  
• Examine your historical data. Use a record of your past sales volumes under similar conditions to estimate how your business will perform in the present. Given the current economic environment, this is especially important. How many sales per rep did you get in years past? How did your business perform in times of rising inflation? Determine your average year-over-year growth, and if you have historical data, then adjust it to rising inflation and to the fact that you may not have as many sales reps as in years past due to the “Great Resignation.”
• Assess your sales pipeline. How many potential sales do you have in the works? Analyzing this will give you an idea of what inventory you need in the near term. Examine each sales lead and determine the probability of it closing. You may want to ask yourself: at what stage is the potential sale? How old is this lead? What is the level of interest? When do you expect it to close? 

Use the FIFO Approach

Using the FIFO approach (first in, first out) will help you organize and prioritize your inventory. In essence, this means that inventory should be sold in the order in which it was purchased, with the most popular inventory being ordered and sold first. This is especially important if some or all of your inventory is perishable or will become obsolete once a holiday has passed. This will go a long way in keeping your inventory management precise and organized. The best way to apply FIFO to your warehouse or storeroom is to keep the newer items in front and the older ones in the back.

Calculate Annual Consumption Value

Knowing the annual consumption value (ACV) of your inventory will help you keep tighter control over your warehouse or storeroom. ACV is simply the annual demand for a product multiplied by the product’s cost. Generally, products with the highest ACVs are the most expensive products, so, therefore, should make up the smallest percentage of your inventory. Then, you can create the ABCs of your inventory, with category A being the items that have the highest ACV; category C being the items with the lowest, and category B being the items that are in between. 

Regularly Audit Your Stock

It is a good idea to physically check your inventory for quality control and to make sure you have the items that you think you have. Even with a good barcode inventory management system, you still may have miscounted the number of items you have, or you could have damaged items on your shelves that, obviously, you don’t want to ship to customers. Conducting regular spot checks of your inventory is especially important for your most popular items. 

Identify Unpopular Stock

Nothing will clutter your inventory management like holding onto stock that isn’t selling. Perhaps you overestimated the stock’s value and popularity; but regardless, holding onto it will cost you money and space in your warehouse. Examine different strategies to get rid of it, such as a special discount sale or promotion. 

Make it a Regular Practice

Good inventory management requires a daily effort to make sure your business has everything that your customer wants. If done properly, it can prevent costly situations such as stock shortages or excess stock. In short, good management of your products will reduce costs, improve your business’ cash flow and bolster your bottom line.