Business Planning for 2023
In September, a group of Colorado business executives discussed the unique challenges faced in 2022 to identify opportunities for business in the upcoming year.
In 2022, all businesses faced several challenges. From the corner mom-and-pop shop to large mega-corporations, there were unique obstacles to overcome. From supply chain stalls to the shadow of inflation across all industries, business leaders were forced to address these issues creatively. In today’s market, most business leaders would agree that the only certainty is uncertainty.
So how should business leaders plan for the coming year? Here are five topics to consider in your 2023 planning.
Inflation: The Elephant in the Room
With the economy still on shaky ground, most industries are expecting some degree of cost increases in their inputs. For business owners, this means careful strategic planning and a close watch on money coming in and out. It’s also important to consider pricing strategies carefully as customers may not be willing to pay more for goods and services.
Facing the Challenge by Managing Costs
When planning for 2023, executives agree that managing costs would be a huge consideration. When asked, 71% agreed that their businesses were already being affected and that the cost of goods was directly being affected. Combined with the tightening of spending among consumers, what ideas were presented to manage costs?
The executives identified that using escalator clauses in contracts can combat changing, unpredictable markets. Expanding volumes was another consideration as increased sales can make up for lower margins. Additionally, utilizing treasury management services and improved forecasting and new forecasting models should be implemented to hedge against uncertainty.
Dealing with Staffing Shortages
While 2022 has not been as bad in terms of staffing shortages as 2021, there is still the issue of finding and keeping good talent. With skillsets diversifying, the challenge of finding good employees has become even more daunting.
What to Do About the New Normal
Adapting to the “new normal” of being shorthanded was a major focus of the discussion. We discovered that a good number of CEOs raised wages in 2022, which many believe to be a source of retention over the year. There was also a notable shift in work-life balance to improve company cultures, such as placing a focus on creating a more family-oriented environment, providing more health and wellness programs, and increasing opportunities for recognition and company-wide awards. Developing the skillsets and providing career education opportunities was a big focus in dealing with staffing shortages as well.
Supply Chain Unpredictability
It has become a widely accepted truth that those with products in stock are gaining market share in the current market. It is common expression to hear people say that they could have had an exceptional sales year if they were able to acquire the products.
In 2022, the availability of goods has drastically changed, as well as their prices. Business executives seem to think that the prices are now stabilizing.
Managing the Unpredictability
There isn’t one single solution to managing the unpredictability of supply chain shortages. The common strategy among the group was communication. Communicating more regularly with customers has been prioritized in 2022, which has helped many businesses stay ahead of changing demand and supply.
Increased pricing to pass higher costs to the customer was also a common thread for managing supply chain uncertainty. Additionally finding ways to reduce sequential build so that projects can be seen to completion was also a strategy being employed.
Interest Rates as Opportunity
The consensus among the group is that rising interest rates were not merely a challenge but an opportunity to identify weaker businesses and eliminate the competition. This survival of the fittest mentality regarding interest rates should only maximize opportunities for robust companies.
How to Address Rising Interest Rates
The executives we talked to are facing the issue of rising interest rates head-on by harnessing private equity, taking advantage of the available employment pool, and simply raising prices as interest rates go up.
Focus on Cybersecurity
All business leaders present acknowledged the complexity of cybersecurity and the consequent need to understand it. There were several stories shared of firms being held for ransom, highlighting the expense of not having an effective cybersecurity system in place.
Looking Ahead at Cybersecurity in 2023
To address this issue, companies are considering outsourcing their data management and cybersecurity or seeking certifications to better understand and mitigate threats, depending on their industry. Whether or not they outsource, networks should be regularly tested and updated with new security protocols to ensure their safety.
The Marketing Pillar
CEOs overwhelmingly agreed that client relationships are the most important marketing initiative in the ever-changing landscape. They noted that increasing customer lifetime value through repeat business, word-of-mouth, and referrals is essential, and the best way to do this is to provide quality work and problem-solving. One executive shared that they dedicate a minimum of 5% of their time to writing handwritten letters to clients and employees.
Marketing Strategies in 2023
Focusing on the quality of work and doing it well is essential for success in 2023. Keeping customers satisfied is key to bringing in repeat business and increasing overall customer lifetime value and retention. Problem-solving is also a great way to build positive customer relationships and create new, innovative solutions to customer needs. Additionally, having a strong brand strategy is essential for success.
Identifying Challenges and Opportunities for the Year Ahead
It is undeniable that the current market is highly volatile, presenting business owners with a wide range of issues in all areas of their operations. Every business leader has a unique approach to managing these issues, and this was highlighted by capitalizing on opportunities, utilizing creativity to make the most of resources, and employing treasury management strategies. By striving for superior performance, businesses can expand.
If you would like to discuss financial strategies for your business including treasury management and lending solutions, reach out to our Commercial Banking team.
If you are interested in the full white paper please reach out to marketing@nbhbank.com.