March 25, 2023


Innovation Leader

Small enterprise tech outlook: Demanding situations and alternatives forward

Small business challenges and priorities in 2022

Symbol: Getty Pictures

With just about part of 2022 in the back of us, the demanding situations going through small and medium-sized companies (SMBs) stay important. The COVID-19 pandemic remains to be very a lot with us, inflicting proceeding force on income and money reserves, upheaval within the labour marketplace and disruption to provide chains. Power costs, already emerging because of top call for as economies started to emerge from the 2020/21 recession, were pushed up additional via the warfare in Ukraine, resulting in common and lengthening inflation

Difficult occasions are very a lot now not going away. 

Macroeconomic developments

In December 2021, the OECD famous that “Output in maximum OECD international locations has now surpassed its late-2019 degree and is converging on its pre-pandemic trail however lower-income economies, in particular the ones the place vaccination charges are low, are liable to being left in the back of”. 

OECD: World GDP Evolution

Chart: OECD

Inflation, which was once predicted to top in past due 2021, is now anticipated to be 2.47% upper international over the yr starting 24 February 2022 because of commodity and monetary marketplace shocks led to via Russia’s invasion of Ukraine. The global hit to GDP over the similar length is anticipated to be 1.08%.

OECD: effect of Ukraine war on GDP and inflation

Chart: OECD

The newest figures for the United Kingdom economic system are in step with those predictions, with GDP falling via 0.1% in March and the Shopper Costs Index together with proprietor occupiers’ housing prices (CPIH) emerging via 7.8% within the three hundred and sixty five days to April 2022 — the absolute best 12-month inflation charge since April 1991. The Shopper Costs Index (CPI) rose via 9.0% within the three hundred and sixty five days to April 2022, up from 7.0% in March.  

ONS: GDP and inflation in the UK

Charts: Place of work for Nationwide Statistics (UK)

Relating to the costs that UK manufacturers of products and products and services pay for his or her inputs and fee for his or her outputs, the rage may be emerging sharply. The newest ONS figures on the time of writing display output costs up 14% at the yr to April 2022 (up from 11.9% in March) and enter costs up 18.6% over the similar length (unchanged from March, and the absolute best degree since data started in January 1985).

ONS: producer price inflation

Chart: Place of work for Nationwide Statistics (UK)  

Small enterprise well being and self belief  

How are those macroeconomic developments taking part in out amongst small companies? In america, the well being of SMBs (outlined as firms with fewer than 500 workers that don’t seem to be sole proprietorships) is tracked on a quarterly foundation via america Chamber of Trade/Met Lifestyles Small Trade Index (SBI). The newest Q1 2022 SBI ranking, in response to a survey carried out between 14-26 January (this is, ahead of the Russian invasion of Ukraine), was once 64.1 — the absolute best degree for the reason that get started of the pandemic:

US Chamber of Commerce/Met Life: Small Business Index

Chart: US Chamber of Trade/Met Lifestyles  
Chart: US Chamber of Trade/Met Lifestyles

Inflation has risen to the highest of the demanding situations going through SMBs in contemporary quarters, adopted via delivery chain problems. COVID-19 problems stay related. In the meantime, issues over worker wellbeing and morale have risen incessantly whilst income has grow to be much less of a subject as america economic system emerges from recession. 

It’ll be attention-grabbing to peer whether or not the image adjustments considerably in Q2, because the impact of the Ukraine warfare kicks in, and whether or not there is any motion at the 51% of US SMB homeowners who believed in Q1 that the small enterprise local weather will go back to customary inside of six months to a yr. 

In the United Kingdom, the Place of work for Nationwide Statistics (ONS) has carried out a fortnightly survey since spring 2020 from a decided on pattern of round 39,000 companies, entitled the Trade Insights and Prerequisites Survey (BICS). A number of the questions requested is ‘How a lot self belief does what you are promoting have that it’ll live on the following 3 months?’. Listed here are the ‘top self belief’ responses thru 2021, damaged down via corporate dimension:   

ONS (UK): SMB 'high' survival confidence

Information: Place of work for Nationwide Statistics (UK) / Chart: ZDNet

The overall development is obviously upward for all corporate dimension categories, however micro-businesses (0-9 workers) and small companies (10-49 workers) are constantly much less prone to specific top self belief in survival than medium (40-99, 100-249 workers) and big companies (250+ workers). In November 2021, handiest round part (52.6%) of micro-businesses had been extremely assured of survival thru February 2022, in comparison to 79% of businesses with 100-249 workers. 

Any other common UK survey is performed via the Federation of Small Companies (FSB), which is used to generate the Small Trade Index (SBI). In Q1 2022, the SBI reached 15.3, returning to a favorable worth — indicating extra SMBs anticipating efficiency development within the coming quarter than decline — after slumping to -8.5 in This autumn 2021. 


Chart: Federation of Small Companies (UK)  

“The advance within the SBI in Q1 most probably displays the economic system’s go back to expansion within the early months of 2022 and the corresponding affect on enterprise process. The autumn in COVID-19 instances and removing of restriction measures has advanced the enterprise panorama in comparison to This autumn 2021, with certain SBI readings being observed throughout maximum primary sectors. Production and wholesale and retail equipped notable exceptions, on the other hand, with damaging readings reflecting the rising supply- and demand-side headwinds going through the United Kingdom economic system,” the FSB stated. 

Once more, it’ll be attention-grabbing to peer whether or not this image adjustments considerably in Q2 2022. 

SMB demanding situations and priorities in 2022

To get an concept of the precise issues going through small companies in 2022, we checked out a couple of (>20) surveys and forward-looking articles printed throughout the previous yr and logged the mentions of various problems and topic spaces. This is the image that emerged.   

Challenges and priorities for SMBs in 2022

Chart: ZDNet

The highest 5 problems — Virtual advertising and marketing & buyer members of the family; Worker members of the family, coaching & wellbeing; Virtual transformation and new generation; IT & enterprise procedure control; and Faraway/hybrid running — are all pushed to some degree via the pandemic revel in. 

Virtual advertising and marketing & buyer members of the family 

Right through lockdowns, the focal point for attracting new shoppers and preserving present ones satisfied inevitably tilted extra against on-line channels. However it is not sufficient simply to construct a website online with a functioning e-commerce answer and hope that consumers will come: companies want to spice up their search engine optimization efforts, in addition to draw in and convert new leads by the use of e-mail and social media campaigns, an increasing number of the use of video and ‘influencers’ of quite a lot of descriptions. And as soon as shoppers are obtained, it is obviously crucial to have environment friendly CRM methods in position in order that SMBs can ship a lovely revel in that builds loyalty. 

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Worker members of the family, coaching & wellbeing 

Earlier than the pandemic, it is not going that issues about workers would have ranked so extremely as they do right here. However common adjustments to running stipulations and practices over the last two years have introduced problems like worker burnout, psychological well being, work-life stability and morale to the fore. Nowadays, employers now not handiest want to assessment how they organize workers’ workflows and observe their efficiency, however will have to additionally keep up a correspondence successfully with (steadily faraway) staff and in finding new techniques to ship coaching, training and mentoring. Failure in those spaces is a recipe for deficient worker retention, and a selected worry for SMBs that lack devoted HR group of workers. 

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Virtual transformation and new generation 

Virtual transformation and the adoption of latest generation is a very powerful focal point for SMBs as it may well put them in a greater place to trip out difficult financial stipulations and achieve an edge on their competition. Cloud generation equivalent to SaaS programs — in particular ones geared toward explicit vertical markets — ship obtrusive advantages in relation to moving from capital to operational expenditure via outsourcing the deployment and upkeep of the underlying generation. This must permit companies to be aware of including worth by the use of the agile construction of bespoke services, and via remodeling on-line reviews the use of new applied sciences equivalent to AR and VR, system studying and AI. 

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IT & enterprise procedure control 

Virtual transformation is not only about embracing state of the art generation for brand new initiatives: steadily, it centres across the want to build up the potency of present methods and processes, and this may proceed to be a key focal point for SMBs. Understanding tips on how to employ siloed knowledge (structured and unstructured) held around the IT property can free up enterprise worth, for instance. Imposing answers that make an SMB seem extra like a bigger endeavor — via adopting an interactive voice-response machine, for example — may be a very powerful luck issue, together with larger automation, streamlined website online construction and upkeep, a shift against e-commerce and quicker fulfilment and transport. Much less glamorous than AR/VR and AI adoption, possibly, however similarly vital. 

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Faraway/hybrid running 

Probably the most profound adjustments caused via the COVID-19 pandemic may be a long-lasting shift against faraway or hybrid running, and the ensuing dying of the standard workplace as the main place of job for lots of workers. In spite of predictable resistance from extra conservative quarters, it kind of feels that companies are adapting to the moving worker expectancies generated via the lockdowns of 2020/21: many staff proved that they might paintings productively from house, or with rare visits to the workplace, and haven’t any need to show the clock again. 

Going ahead, paintings will most probably fall alongside a continuum from absolutely faraway thru hybrid to totally in-office, with the stability relying on an worker’s position, the field their corporate operates in and private selection. SMBs will want to make sure that productiveness, communique and safety generation is in position to carrier faraway and hybrid staff, since the call for for versatile running isn’t going away, and laggards are prone to have bother preserving and recruiting group of workers. 

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There are not any surprises some of the final demanding situations and priorities indexed above, even supposing it is most probably that worry about inflation and provide chains is now upper than it was once when the surveys and research used to collect it had been printed (most commonly pre-Ukraine warfare). Additionally it is satisfying to peer that ‘Sustainability, resilience & atmosphere’ makes a mid-table look.

The 2022 State of IT 

Any other survey that is worthy of word is the once a year State of IT record from SpiceWorks Ziff Davis; the 2022 survey was once carried out in July 2021 and incorporated 1,145 IT consumers from organisations throughout North The usa (57%) and Europe (43%). This survey has a definite SMB slant, with 35% of businesses having 1-99 workers and 32% having 100-499 workers. 

Earlier than the Ukraine warfare and up to date inflation hike, there was once “reason why for optimism, following an total dip in tech spending expansion in 2021,” the record stated, whilst noting that: “The COVID-19 pandemic will proceed to have a notable affect at the IT trade — both without delay, not directly thru bumps in delivery chain problems, or in the course of the legacy of larger ranges of versatile do business from home”. 

Demanding situations foreseen for 2022, damaged down via corporate dimension, gave the look of this in July remaining yr:

Spiceworks Ziff Davis: Anticipated IT challenges in 2022

Chart: Spiceworks Ziff Davis

IT consumers, in particular in medium-sized firms (100-499 workers) had been maximum serious about restricted product availability, transport delays or logistical disruptions, delivery chain problems, product value will increase and chip shortages. Provisioning and supporting faraway staff got here additional down the record (possibly as a result of those problems had in large part been solved all through 2020).


Simply as economies had been starting to recuperate from pandemic-driven recession, warfare in Ukraine and emerging inflation have created additional headwinds for SMBs to navigate.

Indices of SMB well being and self belief in america and UK in most cases larger thru 2021 to Q1 2022, however contemporary political and financial shocks could be about to place the brakes in this optimism.

Key issues for SMBs all through 2021 and shopping ahead — pre-Ukraine warfare — to 2022 incorporated virtual advertising and marketing and CRM, worker members of the family, virtual transformation, IT and enterprise procedure control, and faraway/hybrid running.

On the similar time, IT consumers expected demanding situations round product availability, transport delays, delivery chain problems, product value will increase and chip shortages.

Comparable protection

Inflation, burnout amongst largest demanding situations small enterprise homeowners face: Survey

Inflation melancholy: 1 in 3 small companies imagine shutting down – survey

Document: SMBs are making critical investments within the cloud