What are the small business trends to look out for in 2023?
To help you stay ahead of the curve with your small business, we asked founders and other business owners this question for their best predictions. From chatbots’ increasing popularity to self-service becoming more normalized, there are several shifts in the business sphere to monitor in the future.
Here are 19 trends important for small business owners to keep an eye on:
- Chatbots Providing 24/7 Customer Service
- More Transparency to Boost Customer Confidence
- Sustainable Packaging Will Be a Necessity
- Capitalizing on the Internet of Things (IoT)
- Owners Sharing Creative Visibility
- Rising Cost of Digital Advertising
- Cryptocurrency as a Routine Payment Method
- Businesses Continue Rewarding UGC
- Customer Reviews Gaining More Significance
- Personalizing Experiences Will Become Essential
- A Spotlight on AR and VR Technology
- Hyper-Local Marketing to Build a Strong Client Base
- A Shift to the Buy Now, Pay Later Method
- TikTok Influencer Collaborations Will Be Critical
- ESG Protocols Will Reward Early Adopters
- Rise of Saas Subscription-Based Businesses
- Growth of Hybrid Workplaces
- Spreading Concern for How Companies Affect the Environment
- Self-Service as a New Normal
Chatbots Providing 24/7 Customer Service
AI chatbots are driving conversational commerce as more customers become willing to engage with them. Providing 24/7 customer service is vital to improving customer relationships, and chatbots use data mining to understand people’s needs in seconds to serve up the most appropriate information immediately.
Not only does this reduce the time and stress customers experience searching for answers, but it also helps direct them to the next stage of the funnel.
For small businesses not operating ’round the clock, chatbots can answer queries and engage with customers who might need help outside office hours.
More Transparency to Boost Customer Confidence
Supply chain challenges continue to be a global issue, making it critical for businesses large and small to be transparent with customers about their stock quantities and shipping times.
Due to events over the past couple of years, we now all know that one slight change in the supply chain process results in a more amplified effect further down the line. And when inventory is already tight, surges in customer demand can wipe out stock levels.
So, it’s crucial to have access to real-time inventory data that can help identify gaps in your shelf replenishment practices that cause stock-outs.
Warehouse management systems have inventory dashboards that let you dive deep into your data to discover which items are slow movers versus those that sell out fast. But more important is taking the time to analyze the data and apply the insights that will improve demand forecasting. It will also allow you to provide more accurate shipping and delivery times to shoppers looking for a quick turnaround.
Sustainable Packaging Will Be a Necessity
Recyclable and sustainable packaging is a must. Research has shown that a little over 75% of consumers have been attempting to purchase more sustainable products in 2022.
Around the same percentage expect brands to offer 100% sustainable packing within the next few years. Sustainability is obviously great for the environment, but it also helps increase revenue by giving consumers what they want.
Capitalizing on the Internet of Things (IoT)
The number one trend for small businesses in 2023 will be the Internet of Things (IoT). This is an exciting time because small businesses that design and implement strategies to capitalize on the IoT will have a massive advantage in the fight for market share.
IoT is a network made up of everyday items that have been given an IP address, making them controllable from anywhere. This means consumers can control their connected devices, like thermostats and door locks, with their phones.
Imagine a small business that is having a major sale, and wants to advertise that on its storefronts. With IoT, they can do this by sending out a text message to all the customers who have connected their phones to the store’s Wi-Fi.
This is just the tip of the iceberg. IoT will allow businesses to communicate with their customers and collect new data that can increase sales.
Owners Sharing Creative Visibility
Small Business Owners are as unique as the fingerprint they carry, but more often than not, they have fallen into the “how things are done” mantra of getting business built and running. Check the boxes and move on—the same old same old.
Now, we are seeing a renaissance of authenticity and creativity inside the small business like never before. The world is bored with bland and connection is of utmost importance to consumers, meaning they are hunting for it.
The secret weapon—Small Business Owners sharing their creative journeys, their personal flair and style, and their own obstacles to champion along the way. Creative visibility in shared content is creating engaging and entertaining connections and is a growing trend we see taking the world of small business by storm next year and on.
Rising Cost of Digital Advertising
With the steady increase in the digitization of companies, more and more small businesses are advertising themselves online. This has led to an incredible increase in the costs of Google Ads, Facebook Ads, etc. over the past five years.
Costs will grow more and more: more competition means more budget to invest to emerge. Even thinking about a better long-term strategy, small business owners should invest more in SEO and less in ads.
Furthermore, SEO (“deserved” positioning on search engines) has an average conversion rate of 16%, compared to only 4% for Google Ads and 2% for Facebook Ads.
Cryptocurrency as a Routine Payment Method
Customers generally prefer to use credit cards, but it can be a hassle for some small business owners. Credit card payments process slowly and typically come with a transaction fee to the merchant.
These processing fees and delays can make it more challenging for small businesses to preserve their cash flow. That said, cryptocurrency has the potential to bypass credit card-related issues by offering instantaneous fund transfers and lower fees.
This would prevent SMBs from being tied up in long wait times for funds to clear. While using cryptocurrency is still a new practice, it may become a routine payment method for small businesses in 2023.
Businesses Continue Rewarding UGC
More brands and small businesses are leveraging the power of user-generated content (UGC) to boost their reach and credibility. Through different incentive strategies, companies can highlight user reviews, images, or video content to persuade new buyers of the quality of their offerings.
Some brands repost customers on social media to meet these ends; others develop reward programs that reward users for sharing UGC.
Social proof is a growing phenomenon and a necessity for consumers to vet eCommerce brands and services. Businesses will continue to motivate customers to aid in these efforts through incentives and other strategies.
Customer Reviews Gaining More Significance
In the future, customer reviews will be a more significant influence on any business than ever before.
Customer feedback has always been important, but in 2023 it’s going to take off like never before—that’s when we should really pay attention and try our best, not just for features or price anymore; what other people think about your product/service could either make you millions (if they love it) or lose everything!
People want real advocacy from those who use their products, so if there are complaints online, then these folks won’t buy anything from us, which means fewer sales and a lack of opportunity. So watch those CUSTOMER REVIEWS.
Personalizing Experiences Will Become Essential
One trend to monitor in 2023 is the rise of personalized, customized products and services. Consumers are seeking unique, individualized experiences, and small businesses can tap into this demand by offering customizable options for their offerings.
This could mean offering customizations such as monogramming or engraving, offering fully personalized experiences such as one-on-one consultations, or creating a bespoke product just for the customer.
This trend is not only popular with consumers, but can also be a driver of higher profits for small businesses. We’ve focused on this approach at our company and have seen a significant increase in sales and customer satisfaction. It ultimately allowed us to offer personalized customer service and stand out in a crowded marketplace.
A Spotlight on AR and VR Technology
The implementation of augmented reality (AR) and virtual reality (VR) technology will be on the rise. The potential for networking with AR and VR among small businesses can offer exponential opportunities for growth and partnerships.
Virtual conferences are not only more cost-effective, but can be hosted for more attendees. Additionally, AR and VR technology are industry differentiators in and of themselves and can help any small business stand out from the competition.
Hyper-Local Marketing to Build a Strong Client Base
The biggest small business trend for 2023 is hyper-local, cross-media marketing. Throughout the pandemic, people have been wanting to support their local communities while also connecting with their friends and family in more meaningful ways. Members of your community want to support local businesses because they know that when they shop locally, their dollars stay local.
The best thing for small businesses to do is to develop a hyper-local, cross-media marketing approach so that they can interact with and attract shoppers across multiple touchpoints.
Don’t rely on just digital, take advantage of your retail space and direct mail. Customers want to hear from local small businesses, and it’s up to you to give them a reason to shop for and use your products and services.
A Shift to the Buy Now, Pay Later Method
With the option to buy now and pay later becoming more and more common, layaway has entered the twenty-first century. Kids used to wonder, “What does layaway mean?” but now, a lot of businesses are collaborating with Sezzle, Affirm, and Afterpay to give micro-loans to customers, allowing them to pay for a purchase in installments.
A small business will probably pay a little bit more to work with a buy now, pay later provider than with a typical point-of-sale system. Nerdwallet estimates that most card purchases will cost the business up to 3% of the wholesale, while costs for buy now, and pay later can reach 7%.
TikTok Influencer Collaborations Will Be a Critical
TikTok officially launched its creator marketplace in late 2021, a year in which it had 656 million downloads—the most of any other app.
For a small business, being able to find an influencer with the right audience is a direct doorway into the lives of their followers. That’s why when an influencer marketing campaign works, it REALLY works. Influencers, by definition, have earned the trust, attention, and/or respect of their followers, hence the name.
These campaigns can also be cost effective compared to other channels like paid ads because businesses can negotiate custom engagements with the influencers and know exactly how many potential customers they will reach.
In 2023, with over 84% of consumers reporting being convinced to buy a product after watching a video, it’s clear that TikTok will take off as a go-to small business marketing channel.
ESG Protocols Will Reward Early Adopters
ESG protocols will rule the commercial sector in 2023. Early adopters will be rewarded with attention from private equity firms, investors, top-tier executive talent, supply chain partnerships, international distribution, and more.
Those slow to evolve will expediently lose market share, expansion traction, and their invest-ability status among investors.
Rise of SaaS Subscription-Based Businesses
In 2023, I believe that the subscription-based SaaS model will continue to grow in popularity. This is especially true among startups and small businesses, which can take advantage of the recurring revenue model to attract new customers.
There are a few reasons for this trend, both from a user and business standpoint. First, subscription-based models are more predictable and reliable for users, which can make it easier to budget for and manage expenses. It’s also easier to commit to using a product or service when there is no large upfront investment involved, and you can cancel at any time.
From a business standpoint, cloud computing and modern tools have made it much easier to build and manage SaaS applications. It is also more cost-effective as you can pay for tools you need only when you need them, and easier to scale and grow your business.
Growth for Hybrid Workplaces
Hybrid workplaces are a trend that started with COVID and won’t go away. 16% of businesses worldwide are entirely remote, and many more are hybrid. Business owners have continued to provide flexible work choices after observing the increase in productivity and work-life balance that employees have experienced.
This trend, in my opinion, has also inspired new movements, such as virtual internet events. Because conferences, meetings, and trade exhibits are now being held online, more people can attend, organizations can reach a wider audience, and networking is made possible.
If your company permits it, adapt to the hybrid workplace. Offer flexible scheduling alternatives, such as a mix of in-person and remote work. Organize and take part in online activities. Your firm will continue to grow while your staff is content.
Spreading Concern for How Companies Affect the Environment
The younger generations are concerned with the environment and how companies manage their environmental impact.
As a result, many states and cities have banned the use of plastic bags, for example. We expect more places to follow in 2023. It will become normal for people to bring their own reusable totes when they go shopping anywhere, not just in the grocery store.
Small businesses will continue to take green measures such as using LED light bulbs, using natural cleaning supplies, buying recycled paper, and providing employees with reusable water bottles instead of disposable plastic ones.
Sustainability will become more important to small business owners in 2023 as they look to save money and reduce their environmental impact.
Self-Service as a New Normal
The pandemic brought a new way for clients to buy and shop, and after 2 years, we have come to terms with the fact that it is much more convenient for the customers and is much more flexible. Let me give you an example of a tremendous self-serve business, a BRING YOUR OWN container for cleaning products.
Before the “situation,” people gladly got their cleaning products in the grocery store. Still, nowadays, some businesses offer “per gallon” cleaning products such as dishwashing liquid, liquid detergent, fabric conditioner, etc.
Not only are they lower in product cost, but one thing clients always come back to because of their marketing strategy. You need to bring your own container for the liquid products. Also, it’s a self-serving business model, and customers will get on their own with no store help.
It can be a big game changer, especially with the labor shortage; we can develop many variations of these business methods to apply in our small business ventures.
Brett Farmiloe is the founder of Terkel, a Q&A platform that connects brands with expert insights.