Enterprise Nation and Starling Bank credit entrepreneurialism for what they call ‘the Great British Bounceback’. Their research reveals that 43% of the small businesses they surveyed said performance is back to pre-Covid levels, with 30% performing better. 40% are recovering, and only 5% are worried they won’t bounce back. Over half of businesses have adapted to changing customer needs during the pandemic, including 28% who have launched brand new products and services and 11% who expanded into a new industry.
2022 looks set to be a pivotal year for small businesses, with recovery building into long term resilience. Here’s a list of the five top small business trends, including the opportunities to make the most of.
1. Business trends in sustainability
Small and medium-sized businesses make up 99.9% of the UK’s total business population, which means small businesses will be at the forefront of the green economy. To achieve the UK’s target of net zero by 2050, businesses will need to take action and reduce their carbon emissions.
According to the Federation of Small Businesses’ Accelerating Progress Report, 56% of small businesses believe the world is facing a climate crisis. However, only 36% have a plan in place, and just 30% have acted on their plan.
Putting sustainability at the heart of your business could help you navigate a range of challenges and open the door to new opportunities. For example, reducing energy usage, using less packaging, designing out waste, or selling on waste that can be reused by other companies are all ways to cut costs and increase profits.
Switching to local suppliers could help you minimise the kind of supply chain issues and materials shortages we’ve seen in 2021. Innovative green products and services could help you access new sources of low carbon funding, together with new markets, partners and customers.
Being able to demonstrate your sustainability credentials will be crucial as global brands and larger companies look to decarbonise their supply chains. Giving you a competitive advantage and greater long-term resilience.
2. Business trends in reconfiguration
The UK economy has recovered faster than predicted at the start of 2021, but the picture is varied in different sectors and regions. According to the Institute for Fiscal Studies (IFS) “a sustained and complete economic recovery remains far from secure”.
The pandemic is having a persistent impact on the economy, despite the easing of restrictions. For example, hospitality firms expect long term sales to fall by around 4%, while transport and storage firms expect them to rise by around 5%.
Research by Experian shows when and how business credit scores of different industries and regions suffered as a result of the pandemic, but also tracks the progress of their recovery. The level by which business credit scores have fallen and businesses have been impacted has varied hugely, as too has the speed, pace and timing of the recovery in 2021.
Many small businesses are feeling optimistic about 2022 with lessons learnt during the pandemic increasing resilience and potential for growth. Companies are now seeing the benefits of investing in the online side of their business, with six in ten Small & Medium Size Enterprises (SMEs) saying their customers spend more with them online than they would in-person. 60% have added new digital payment options, 55% increased digital marketing, and 31% started offering home delivery or takeaway options. 56% are now feeling more optimistic than before Covid-19, with the pandemic forcing them to embrace digitalisation and changing consumer behaviour.
3. Business trends in marketing with a purpose
Deloitte predicts purpose to be a key trend for 2022. Many of us have reassessed what we value – driven by the pandemic, climate change and global social movements. Businesses have had to rethink everything from how their products are made and delivered, to their relationship with employees, customers and suppliers. The pandemic saw consumers keen to support local businesses and small companies can build on that in 2022 by putting purpose at the heart of what you do – aligned to your stakeholders’ needs. From sustainability and mental health in the workplace, to diversity, equity and inclusion (DEI).
Small businesses can capitalise on the trend towards meaning and authenticity by focusing on personal branding. Share your story and your employees’ stories. People do business with people they know, trust and like.
With the online side of business here to stay, small businesses will need to consider how to deliver a more hybrid customer experience. Ultimately, you want your customers to experience the same sense of connection with your business, whether they’re interacting with you digitally or in-person. Online communities have also made it easier for small businesses to connect with each other. Forbes predicts networking will be a key trend for 2022 as businesses embrace partnerships to adapt and thrive.
Technology continues to feature prominently of course and small businesses now have a multitude of low-cost tools at their disposal. From Google for lead generation to Instagram and TikTok for storytelling, video and influencer marketing. Many small businesses have built online communities and embraced platforms such as Microsoft Teams. Now business owners will need to stay flexible and adapt to new technologies as their customers do.
Artificial intelligence (AI) enabled solutions will also become more important, and more accessible and affordable for small businesses. Technology and the decentralised finance movement is changing the way that small businesses can raise finance, through crowdfunding and peer-to-peer networks for example.
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Find out more4. Business trends in alternative marketplaces
The ability to be agile when it comes to developing and delivering products and services will remain key in 2022 and beyond. Consumers have got used to innovative, creative approaches that quickly meet their needs and expectations. For many small businesses, this will mean continuing to digitise and automate end-to-end customer journeys, not just the front-end experience.
This is one of the reasons why collaboration and forming new partnerships will be key in 2022 – especially around sustainability and purpose. Alternative online marketplaces like Onbuy.com are putting ethical practices at the heart of the consumer experience, with Amazon only controlling around 30% of the UK’s e-commerce market. New players are moving into the B2B e-commerce space too, including Source Green Packaging, the world’s first global sustainable packaging marketplace. Trends accelerated by the pandemic such as contactless payment and ‘buy now pay later’ point of sale financing are here to stay. We’ll likely see more innovation in the financial sector too, with traditional lenders collaborating with FinTech’s to deliver new products and services, enabled by Open Banking data.
5. Business trends towards the growth of the circular economy
The pandemic has accelerated retail’s transformation with many well-known brands disappearing from the high street and smaller retailers launching online and digital hybrid stores. 2022 will see retailers continue to build new business models, driven by sustainability and changing consumer behaviour.
Forrester predicts that the circular economy will become a must-have with consumers increasingly favouring second-hand, reusable and recycled products. 49% of online adults in the UK prefer to buy environmentally sustainable products. This represents a huge opportunity for small businesses, especially with larger brands looking for new partners to help facilitate their transition.
To compete with larger companies, small businesses will also need to look at the differentiators that influence consumer choices online. For instance, around three out of five online adults prefer retailers that offer free return shipping.
Where next?
Agile by nature, SMEs are well placed to capitalise on the opportunities and small business trends of 2022. Small businesses can continue to build on the relationships formed with customers during the pandemic and form new partnerships with larger companies looking to decarbonise their supply chains and create purpose-led brands.
Lessons learnt during the pandemic will help small businesses turn recovery into resilience, but it will be vital to invest in and demonstrate your sustainability. In another year of rapid change, businesses will need to ensure they have the right safeguards in place – including business credit checking tools for new customers and suppliers, and keeping on top of their finances to protect cash flow.