As 2021 comes to a close and we reflect on all of its successes and challenges, it is also a great time to look ahead to 2022’s opportunities for the small business community and how your business can be successful in the new year and beyond.
The past couple of years has seen massive changes in how small businesses operate, reach customers, and cultivate new relationships with their communities, vendors, and partners. From teaming up with other local small businesses to drive mutually beneficial outcomes to working with their lenders, accountants, and suppliers in new ways, small businesses throughout the region have rewritten their business plans many times over.
Here are some tips to help you prepare for your small business’ success in 2022.
Adjust Your Planning Approach
When it comes to planning for the next six, 12, or even 18 months, one thing is certain.
Predictability in the marketplace is gone.
Between staffing demands, supply chain delays, and rising costs, small business owners need to write their 2022 plans in pencil. Stay connected with your local chamber of commerce and your banker, tax advisor, and accountant to stay on top of trends, small business programs, and marketplace developments that could impact your business and change your plans.
Most importantly, be nimble and open-minded to pivot, using your experiences over the past 18 months as a guide.
Tackle Inflation Head-On
According to many analysts, the inflationary period we are currently in is not going away soon, and that we’ll need to be patient and make some adjustments.
Take a hard look at your vendor and supplier network and start planning now to adapt to delays in the supply chain. Most likely, you’ve already had to do this in the past several months, so take those learnings and plan your strategy to get the materials and products you need to keep your business operating as smoothly as possible.
Tap Into Your Credit
With slow supply chains causing disruptions in cash flow cycles, combined with low-interest rates, now may be a good time to look at your 2022 budget from a new perspective.
Short term, using cash for operating expenses may be a bit more difficult if your cash-out and cash-in cycles are off. It may be better for your business’ financial position to keep cash in reserve and use a low-interest line of credit or other loans to pay for expenses like inventory, especially if you need to pay your supplier up-front and deal with delays in fulfillment on the back end. Even vendor relationships using net-30 terms could be impacted by delays.
Other areas to consider using a line of credit while building your cash reserves include payroll, business expansion, and employee retention efforts, and customer loyalty programs. Building these areas now can help your business perform even stronger when inflation and supply chains do stabilize.
Now is also the time to look at your equipment needs for 2022. Some people think it is better to lease business necessities like pizza ovens or machinery, not knowing they can take advantage of a tax write-off called Section 179 of the IRS Tax Code when they purchase equipment or software for their small business.
Finally, consider using your small business rewards credit card for everyday business expenses, and if you have multiple buyers or employees piling up travel expenses and purchases, consider authorizing them to carry a company credit card to earn even more rewards that can be reinvested back into the business.
While there is no one-strategy-fits-all approach to planning for what is shaping up to be a unique new year, applying these tips along with what you have learned while leaning on your team of experts can help lead your small business to a successful 2022.
Anthony Ryan is Senior Vice President, Director of Small Business Lending for WSFS Bank. He joined WSFS in 2011, bringing with him 30 years of retail and small business banking experience.
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