(BPT) - When the calendar flips from one year to the next, 'new year, new me' regularly comes back into the communal psyche. This oftentimes manifests through health-focused resolutions but can easily be applied to how business plans are formulated and how execution can be optimized for the year ahead.
Here are five areas small business (SMB) owners may want to focus on now to help them achieve their goals and respond to changing customer behavior in 2023.
1. Focus on infrastructure & supply
Investing in infrastructure or supply chain improvements that can optimize processes may help SMB owners reach their 2023 sales goals. This can be achieved with simple investments, such as purchasing new software, or more significant investments, such as identifying new suppliers or buying new equipment to fulfill orders more efficiently.
For Southern Elegance Candle Co., a North-Carolina based candle company, the ability to invest strategically in materials has been key to scaling their business and navigating supply chain issues. With financing from PayPal Working Capital1, founder and CEO, D'Shawn Russell, was able to secure the volume of supplies the business needed to avoid manufacturing interruptions and keep up with demand.
'Having quick, convenient access to the funds we need to buy in bulk is critical for us to be able to stay in business,' says Russell. 'It's been a game-changer. Knowing that the funding is there when I need to invest in product gives me confidence as we grow the brand.'2
2. Connect the brand to the wider community
Now more than ever, consumers are interested in purpose-driven brands. According to a research study by Zeno, 94% of global consumers surveyed say it's important that the companies they engage with have a strong purpose. This report also found that consumers are four times more likely to purchase from such companies and 4.5 times more likely to recommend them to friends and family. For Millennials and Gen Z, purpose is a key factor in their purchasing decisions, with research by Deloitte finding that the younger generations are more likely to pay a premium for brands that align with their sustainable values.
By analyzing brand values and the needs of the community of customers they serve, SMBs can identify authentic opportunities to integrate purpose-driven products or programs into their business plans. For ocean adventure brand Everyday California, balancing profit with purpose means partnering with 1% For The Planet. This allows them to donate 1% of their gross revenue to support environmental charities, such as Green Wave, that align with their brand identity and commitment to protecting the ocean.
3. Get ready for returns
For most businesses, the holiday season isn't over after New Year's, because they still must prepare for the wave of returns. According to a survey by the National Retail Federation, total returns of holiday merchandise sales account for $158 billion in lost holiday sales for U.S. retailers. While larger companies may have the infrastructure to support this volume, it can be particularly challenging for SMBs that may not have the capital to offset the cost of returns.
To help bridge this post-holiday cash flow gap, SMBs may want to consider applying for financing. Using a program like PayPal Working Capital, businesses can apply for fast access to help close any cash flow gaps resulting from return season. Brands can also use this efficient, flexible financing to invest in new stock that refreshes their offering and excites customers to exchange for value-added products rather than making straight returns.
4. Create opportunities for cross-selling
According to Invesp, existing customers are likely to spend more than new prospects. An increase in customer retention by just 5% can increase profits by at least 25%. To retain existing customers and increase profits, SMBs should look for ways to engage consumers post-sale.
One way SMBs can better engage their audience is by creating interactive video content that adds to a customer's product or service experience. Research by Hubspot has found that video content is more memorable and popular for consumers than other forms. SMBs can take advantage of consumer interest in video in multiple ways, such as investing in video tutorials about how to use their products for their website or posting interactive glimpses into product development via short videos on social platforms.
During this post-sale activity, brands have an opportunity to engage with customers and cross-sell related items.
5. Expand offerings to keep customers engaged
Recent research from McKinsey found that customers are increasingly looking to try something new. As a result, it's crucial for SMBs to have ready access to the capital they need to innovate quickly and provide the ever-changing novelty that customers are now hunting for.
When Big Red's Hot Sauce was approaching their 10-year anniversary, founders Paul and Tasia Ford saw an opportunity to both engage their customers and celebrate the milestone by growing their product line with a set of 10 new flavors.
To help fund product expansion, they applied and were approved for a PayPal Business Loan3. The lending allowed them to navigate supply chain challenges more easily, so they could obtain enough of the bottles and packaging they needed to meet demand.
Paul Ford was impressed that the funding was "quick, efficient and immediate.'2 This access to capital has helped them grow from three flavor offerings to 21 products in just the first 10 years of operation.
"In small business, timing is everything," said Tasia Ford. "Having access to funds gives you the opportunity to be competitive in a very competitive market."
The content of this article is provided for informational purposes only. You should consider obtaining independent business, tax, financial, and legal advice before making any business decision.
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1 The lender for PayPal Working Capital is WebBank, Member FDIC. Applicants must satisfy certain requirements to be eligible. Lender approval required - terms and conditions apply.
2 Results or experiences may vary.
3 The lender for PayPal Business Loan is WebBank, Member FDIC. Applicants must satisfy certain requirements to be eligible. Lender approval required - terms and conditions apply.