Small businesses are the backbone of our economy, driving innovation, job creation and economic growth. But growing a small business comes with uncertainties and the constant need for adaptation. These variables don't just affect a business' bottom line; they influence how businesses think about risk mitigation and the insurance policies they need to future-proof what they've worked so hard to build.
At Counterpart, we recently took the pulse of over 300 small business owners and CEOs across the U.S to get a snapshot of what is top of mind as they look toward 2024. The results indicate that the resilience and agility of small businesses continues to be tested by an increasingly volatile operating environment.
Small Businesses Remain Optimistic Despite Challenges
2023 has been marked by sustained high inflation, lingering supply chain snarls and a difficult hiring environment. Yet the determination of American entrepreneurs prevails; small businesses remain optimistic about the economic outlook and the future of their businesses. Roughly 45% of CEOs and business owners believe the economy has improved in the past year, and over 53% report they're optimistic about the future of their businesses.
Despite this optimism, many of the issues that have cast a shadow over the post-pandemic years continue to cause headaches. Inflation is top of the list, followed by supply chain disruption. While inflation may be largely out of the control of business leaders, steps can be taken to minimize its impact. These could include purchasing in bulk, exploring cheaper lines of credit or, if necessary, increasing prices.
See also: Building an Effective Risk Culture
Right-sizing the Workforce
Our survey also revealed that CEOs and business owners are increasingly looking to right-size their workforce. Human resource issues are among the top concerns for business leaders as they work to ensure they have the right workers with the right skills in every role. Recruiting and employee retention were the third and fourth most frequently cited challenges.
As business leaders restructure and rebuild their workforces, we can expect layoffs for the foreseeable future, with four in 10 owners and CEOs indicating they anticipate layoffs. This outlook will create a tricky landscape to navigate; it's important that company leaders understand their legal obligations when it comes to layoffs and terminations. Employee rights and termination laws vary by state, and new regulations are often introduced. Companies without dedicated HR teams should consult with a legal expert before conducting layoffs or terminating employees.
Understanding Exposures and Managing Risks
In the aftermath of the pandemic, and as the corporate and regulatory landscape continues to become more complex, small businesses are very conscious of their exposures. Almost all CEOs and business owners say they understand their exposures, and a quarter have significantly expanded their business insurance coverage over the last year.
Even with this high degree of confidence in understanding risks, it's important that small business leaders consult experts, to make sure their businesses have adequate insurance coverage. Insurance agents and insurance carriers are key stakeholders in helping small businesses better understand their weaknesses and potential exposures. They can offer important guidance and custom risk assessments; businesses can understand their unique operating risks and work with insurance experts to develop preventative strategies and practices.
See also: Biggest Business Trends for 2024
Increase in Insurance Costs and Coverage
Over 65% of CEOs and business owners say business challenges are continuing to increase, which will have a knock-on impact on insurance coverage. As insurance costs continue to rise, small business leaders can do their part to drive down their premiums by reducing risks. Companies should implement employee training programs for common risks like sexual harassment, workplace safety and cyber security. These actions will help small businesses reduce their risk of claims and can help lower overall insurance costs. Businesses can create safer operating environments with fewer exposures.
Small businesses navigate an ever-evolving landscape, with unexpected hurdles around every corner. Anticipating challenges, understanding risks and mitigating potential threats can help clear the path to allow leaders to grow their business with confidence.