Small and medium-sized business (SMB) owners are constantly dealing with unique challenges on many fronts. Understanding the causes of problems and potential solutions can help you make the most of your company's resources to meet challenges. And he says that in 2024, the challenges may not be as severe as in recent years. Here are three financial trends to watch out for (but don't fear).
1. Fluctuations in demand
Consumer spending, which accounts for the bulk of U.S. economic activity, is giving what NBC News calls “mixed signals” to retailers, many of which are hiring less during the 2023 holiday season than in past years. are doing. MarketWatch said consumer spending was “not as strong as it initially appeared,” as evidenced by revised U.S. Bureau of Economic Analysis (BEA) gross domestic product (GDP) estimates that lowered consumer spending. Reported. According to BEA, consumer spending slowed to +0.2% in October 2023 from +0.7% in the previous month.
Purchase special offers
Check out our offers on the latest Samsung technology.
Talk to a solution expert
Get expert advice from our solution consultants.
consult an expert
What can small businesses do to cope with volatile demand?
- Expand your market footprint. If you currently serve one city or town, consider expanding to nearby areas. If your business only serves consumers, consider offering services to small businesses and small offices with a similar profile to your existing customers.
- Up your marketing game. If your customers love you, collect their feedback in written, audio, or video form and add these glowing customer testimonials to your online or social media campaigns. Focus on authenticity and hone your business persona to the extent that you and your employees feel comfortable.
- Take advantage of PR. If your business has a great story to tell or a timely initiative, you can get noticed by other businesses and publications. If you or someone on your team exudes charisma, use it in radio and TV interviews, podcasts, and more.
While the above includes working aggressively to acquire more customers, implementing the following suggestions may also help your business in a softening market.
- To retain existing customers and increase loyalty, provide transactional recognition. Package one or more combinations of products and services that customers typically purchase and offer this bundle at a discount on a single price. Sell your services at a discount over a period of time. To encourage its use, limit its duration to 3 haircuts within 90 days.
- Maintain prices for high-cost items, but offset with lower volumes. According to Fortune, many restaurants used this technique to offset costs and retain customers during the peak of inflation. Some food companies are doing something similar with smaller server packages in the same price range.
- Reconsider your product or service line to further support your bottom line. What sells best? If you have a product or service that is losing money, decide how to make it profitable. If you can't do that, consider canceling.
2. Interest rate relaxation
Inflation is probably under control, but it seems likely that high interest rates will continue, at least for a while. There are reports that the Fed will cut interest rates several times in 2024, but it is unclear when and by how much. By focusing on SMB best practices, you can prepare for and overcome the challenges you face in any marketing situation. In the meantime, consider the following actions based on the interest rate situation in Q1 2024.
- If you're thinking of getting a business loan, but you don't need it urgently, consider holding tight, given that interest rate hikes appear to have plateaued and a rate cut may be on the horizon. please. For technology purchases like computers and mobile devices, consider Samsung Business Financing, which allows you to continue shopping online with Samsung using a business line of credit.
Scan here to get started:
- When interest rates decline, consider rolling your working capital loan into an equipment loan or other term loan to lock in your interest rate and avoid the fluctuations typically seen in credit lines.
- Pursue extended periods (such as net 30, 45, or 60 days) with suppliers. If you pay these on time, the interest rate will be zero.
3. Price adjustment
Business owners often focus solely on sales figures as the determining factor for business success. This is a natural reaction because sales drive business growth, but focusing solely on sales can lead to poor profit margins, cash flow problems, and losses.
In competitive markets, business owners often feel pressure to lower prices to maintain sales volume. In these cases, many owners will ask for a discount or reduction in price. However, this is rarely the answer, even temporarily. Few companies (like Walmart) can produce extremely high volumes to justify low prices.
Pricing is very important. Products and services must be priced high enough so that the company can maintain the operating and net profit margins necessary to achieve its strategic goals. Additionally, the higher the profit margin, the more revenue is reflected in the bottom line. Conversely, the lower the profit margin, the more revenue must be generated to achieve the same bottom-line impact as a given cost reduction. For example, if the profit level is 10%, an increase in sales of $10,000 has the same effect on the bottom line as a cost reduction of $1,000. However, if your profit margin drops to 4%, you would need to generate $25,000 in revenue to equal $1,000 in cost savings.
To survive the changing market and strengthen your business, try these two things.
- Reduce or reduce costs wherever possible. Reduce the amount you pay for goods and services by buying in bulk, negotiating lower prices, and switching suppliers. Automate operational procedures where possible.
- Add value to products and services by providing warranties and guarantees, high levels of customer service, and customer inspections and follow-up. Communicate that value clearly to your customers and make sure they fully understand that your company is providing it as part of the price they pay.
Being a small business owner has its challenges, but it can also be extremely rewarding, especially if you are able to overcome these challenges with strategic actions and solutions. Addressing obstacles can create stronger, more sustainable companies. Let's continue to grow!
Samsung is dedicated to creating Solutions for small and medium businesses We help your business grow and move strategically forward every step of the way. You can also take advantage of special business pricing through: samsung business direct We offer discounts and financing options on everything from smartphones and tablets to desktop monitors and memory.