With every second headline forecasting a tough year ahead, many small business owners will be bracing themselves for rough weather in 2023. When the outlook seems so bleak, it’s easy to become overwhelmed.

Yet no small business has the power to influence global economic conditions or geopolitical issues. Instead, small businesses should focus on the things they can control – and the good news is, there are plenty.

Here are some of the key things small business owners can do to get in good shape for 2023:

  • Ask some important questions. Focus on managing debt, budget and cashflow, getting the right structure and mitigating risk – these are even more important in the uncertain times than in the good ones.

  • Develop a good business plan that should include answers to these questions:

                  – Who is your ideal client?

                  – What do you stand for?

                  – What is your unique selling point – what makes your business stand out?

                  – Where do you want to get to?

                  – What are your KPIs?

  • Work out how your cashflow has changed. Once you have a plan, you need to know how you’re going to get there. A budget or cashflow is a must. A good starting point is past performance. Start with that, then examine what has changed in your business with customers, suppliers, staff, wages and the economic environment, then plan around that.

    Forecasts should be adjusted as you go to incorporate significant shifts in revenue or costs. This will give a clear picture of the year ahead, support your decision-making, and help you plan for cash requirements and tax payments.
       
  • Get the right people in the right place. This is self-explanatory, but ensuring you’ve got a good team and enough resourcing at the right levels is crucial. This can be easier said than done in the current environment. But it may also mean acknowledging that you need external advice.

    Tax changes, regulation and reporting requirements are continually adding new layers of compliance for businesses. While it’s understandable that small business owners worry about the cost of external advisers, they are also the ones who don’t often have the time or resource to dedicate to keeping on top of all the changes.

    It’s worth speaking to your financial adviser, your lawyer, your accountant and your banker as often as you can. Even your insurance broker, as this will help to identify and manage any vulnerabilities. Business advisers also provide helpful tips, for example, advocating for a good debtor system so that cash is coming in promptly. The cost of outsourcing will have less consequence on a business than the cost of being non-compliant.  

  • Have a traffic light system. This is the good old risk matrix – sorting your risks into red for the greatest threats, followed by orange and green. Ask “what’s going to sink my business?” to identify the major potential challenges and work out strategies to deal with those first. Then work through the orange ones that would give you some sleepless nights if they eventuated. Finally, consider the green ones – the good-to-haves that may not be urgent, but which could give you the edge if you address them sooner rather than later.

  • Get smart about pricing. Many small businesses refuse to implement price increases for fear of alienating their customer base. But failing to react to price changes when inflation is going into overdrive means margins will quickly erode. That said, it’s important to be genuine in any price increases. Sometimes a price increase seems a bit arbitrary, with no reasoning behind it other than, “Well, everybody else is putting their prices up."

    Benchmarking is a useful tool, but let’s face it – business is about relationships and trust. If you’re just raising prices because you can skim an extra 5%, that’s not going to work long term. If a customer asks why you have put up your prices, you should be able to give good reasons for it.

  • Lock in your stock. If cash is king, there’s a new emperor in town: inventory. People don’t want to wait months for products to arrive, and with ongoing supply-chain issues, having stock on hand will help give your business the edge.

    Holding extra inventory does carry additional costs, so (with reference to the above point on pricing) don’t be afraid to charge for it. However, if you do sell things that take three or four months to arrive, you’d better let people know. A "no surprises" policy goes hand in hand with building trust and confidence.