Happy new year. Let’s hope 2022 throws off more positive vibes than 2021/2020 combined.
Having recently completed a wave of interviewing of our SMEs across the country, it is opportune to consider their expectations for 2022. Some of the following has been discussed previously in our e-Newsletters … some hasn’t but is quite obvious … and maybe there’s a newbie or two.
SME’s 10 key expectations for 2022 are as follows …
Ongoing lockdown/operational uncertainty. Surprise, surprise. SMEs are open … shut … open … shut. They obviously hope this doesn’t continue, and they’re incredibly frustrated … but resigned to it. Frankly, what can they do anyway?
They’ve been here before so (to a point) their business can handle it. In understanding this, there are some nuances that need to be appreciated. They have operated in a remote-working/work-from-home environment before … they have their eComm set up and running … they have the tech they need … their systems are in place. In other words, they’re on a well-trodden path. So, in this sense, they’ve ‘been there done that’ and they can handle it. But there are some aspects of it that ARE new and ARE a problem (see below).
Ongoing dramas in sourcing stock/materials. We have discussed this throughout 2021 and the situation has only deteriorated further. Any SME that imports stock/materials from overseas – and even many that source locally – are facing shortages. This is now well understood. What is less understood is the challenge of sourcing from different/new suppliers. Some commentators think that sourcing product/materials from different suppliers is easy – it is far from it. It takes years to build up working relationships … IF there are alternative suppliers at all.
Staffing shortages. No need to comment on this – we’ve covered it before, and anybody who is alive in Australia realises that staffing shortages are very real and aren’t going to disappear overnight.
Increasing prices. Again, we’ve talked about this for over a year, but it’s important. Any SME that has some pricing power is pushing through price rises. End of story. Some are doing it to protect margins, others are doing it because they can. But prices are going up. This is a key reason why we harbour great concerns over the RBA’s perspective on price rises/inflation … and therefore interest rates. Maybe the RBA speaks to different businesses to us …
Tightening cash flow. This is a ‘sleeper’ and one to keep an eye on. Cash flow is really tightening up out there. It may be because stock/materials are more expensive … it may be because SMEs are having to buy MORE stock to cover supply uncertainties … it may be because we’re just over the Christmas hump … it may be for a whole lot of reasons, but cash flow is tightening. (Note that a year ago cash flow was actually very healthy – thanks in large part to the generous JobKeeper program, which saw SMEs awash with cash. Hence they have gone from one extreme to another).
Work from home/employee flexibility. SMEs have embraced work from home – but have they had any choice? It is now an employee expectation, and not all business owners are happy about it. A growing number want the band back together. They’re increasingly thinking that working from home is okay for treading water but it doesn’t enable them to truly build organisational culture, mentor staff and drive the business forward. (Note that this varies by business owner, job position of the employee, industry of operation etc.).
Mental Health pressures. SMEs are very concerned about the mental health of their staff, not to mention their own mental health challenges. The pressure that business owners are under is enormous and they’ve been running in the red-zone for years now. Climbing Everest is one thing … but to have to do it again … and again – wow. It’s exhausting. Up to a couple of weeks ago a lot of business owners were cooked. Let’s hope they’ve had SOME chance to refresh. This is a watch-out for 2022.
Increasingly marketing their business. In our pre-Xmas research, business owners reported two key changes they were making in anticipation of 2022 … first they were boosting employment (easier said than done) … second, they were focusing more on marketing their business. They believe that this is a time to get their name out there, undertake more business development, generate more work. Notwithstanding that many also discuss social media/digital advertising as one of the pain points in their business, they realise they need to continue to embrace it and are doing so.
Optimism that they’ll have a good year!!!! Despite all of the above, business owners are feeling optimistic about 2022! Maybe this is a result of their natural optimism (it’s hard to run a business if you’re a pessimist!) … but the extent to which business owners have positive expectations for 2022 is quite striking. You have to admire their courage and resilience. We certainly do – that’s why we’re not bored researching them after nearly 30 years. (More on that particular point in our eNewsletter of Feb 1, 2022 … 30 years – to the day – that I founded this business).
Conclusion
Business owners are cautiously optimistic about 2022. They believe it will be the year in which we emerge from the covid fog – but none of them are getting ahead of themselves. The past 2 years have been too difficult for them to now be overconfident or cocky.
Next Month : Musings and learnings from 30 years of SME interviews.
