Many of 2023’s trends are focused on how small business owners can stay resilient and find ways to thrive, building on the lessons learnt in 2022 and during the pandemic. They also show how the UK’s changing entrepreneurial landscape is being driven by a broad range of economic, social, technological, ethical and environmental factors.
Trend 1: Affordable sustainability
Over half of small and medium-sized businesses[1] (SMEs) have invested in sustainability this year and plan to do more in 2023. One of the biggest incentives is changing consumer behaviour.
Deloitte[2] reports that consumers are increasingly choosing to live more sustainably and buy just what they need, driven by concern around the climate crisis and the rising cost of living. They’re also choosing brands that share their ethical and environmental values and ditching those who don’t. Especially when it comes to the products bought most often, such as food, drink, clothing and household and beauty products.
Embracing circularity is a key part of the shift towards sustainability, along with reducing waste. Consumers are choosing durable products that can be repaired and reused, rather than just recycled.
However, affordability is also one of the main barriers to consumers adopting sustainability. As the cost-of-living crisis continues to bite, consumers will be looking for more affordable sustainable products and services, along with more help and support around sustainability.
Small businesses are well-placed to provide more sustainable options – from locally sourced, seasonal produce, to trusted information and advice.
Top tip for 2023: Focusing on the deeper trends within sustainability, such as affordability, durability and circularity, will help you spot gaps and new opportunities to grow and connect with your customers. Remember, sustainability involves ethical factors as well as environmental ones. Consumers value brands that champion human and workers’ rights; as well as net-zero.
Trend 2: Environmental, Social, Governance (ESG)
Actions not words: Brands need to prove their ethical credentials, not just talk about them. Ethical consumer spending in the UK is growing, including sectors like eco-travel and transport. However, building trust is especially important at a time when many consumers are wary of ‘greenwashing’ and ‘social washing’ – terms used when brands overstate their environmental and social credentials.
Alongside affordable sustainability, ESG is set to be a key trend for small businesses in 2023. An ESG strategy shows what you’re doing to be environmentally and socially responsible, and a robust and transparent business. ESG isn’t mandatory for small businesses, but it still offers many benefits.
Research by accountancy firm, Moore Global[3], found that businesses committed to ESG have seen profits rise by around 9% over the past three years. From an investor viewpoint, your ESG strategy shows how you’re reducing risks and embracing new opportunities for growth. For example, how you plan to meet future environmental legislation.
People want to do business with brands that share their values, whether as a consumer, an employee, a supplier, or a collaborator. Focusing on your ESG strategy will help you show everyone from investors to customers why they should choose you as a trusted green business. It will also help you build on a key trend from 2022, marketing with a purpose.
As a small business you can make a big difference, especially in your local community. ESG gives you a way of leveraging your strengths and turning them into a tangible competitive advantage. Remember, staying agile will help you to respond to changing consumer needs, including providing local support in the cost-of-living crisis.
Top tip for 2023: There are many government-backed support schemes available for small businesses which could help you with ESG areas such as reducing your carbon footprint and ethical leadership.
Trend 3: Green supply chains
Suppliers will be expected to help meet brands’ sustainability targets. As the world moves towards net zero, brands are increasingly looking to green their supply chains. In the UK, 82% of FTSE 100 companies[4] now aim for net zero emissions by 2050.
Proving your credentials as a sustainable business will put you in a better position to be chosen as a green supplier or partner. In addition, many larger brands are committed to helping their suppliers become more sustainable, so you may not have to go it alone. For example, dairy co-operative, Arla Foods[5], has said it will pay its farmers more for their milk, if they meet the company’s new environmental sustainability targets. This kind of sustainability incentive is likely to become a key trend within supply chains, as brands look to reach net zero.
Greening your own supply chain is also key. Switching to environmentally friendly suppliers will make your business more sustainable, but that’s not the only benefit. It could also help you innovate, grow and future proof your business. For example, by introducing the next generation of sustainable materials into your products.
Top tip for 2023: Choosing local suppliers could help you solve challenges such as supply chain disruption and boost your ESG credentials by reducing your carbon footprint. Remember that greening your supply chain could also involve bringing business processes in-house.
Trend 4: Deeper digital transformation
The pandemic has accelerated the digitalisation of small businesses. Research by Sage[6] found that 8 in 10 SME’s now need digital tools to start, survive and grow their business – across all sectors and parts of the UK.
In 2023, technology can help small businesses navigate a range of challenges and opportunities. From improving customer experience and driving operational efficiencies, to using data for increased sustainability. However, there are a number of barriers to greater tech adoption, including lack of time, expertise and money to invest.
Globally, digital trends for 2023 include more accessible and affordable artificial intelligence (AI) solutions, an enhanced Internet of Things (IoT), sustainable technology including greener data centres, and a more immersive digital world. Tapping into digital trends could give you a competitive advantage or help you identify a gap in a new or existing market. It will also help you to future proof your business.
ONS data[7] shows that while we’re still spending more online than before the pandemic, consumers have also returned to shopping in-store. This makes it even more important for small businesses to deliver a hybrid customer experience, across multiple channels. Taking a deeper dive into e-commerce trends will help you reach new and existing customers, and spot gaps in the market. For example, social commerce, re-commerce, and subscription commerce are all expected to grow.
Many payment trends are also here to stay, including frictionless payment methods such as digital wallets and in-app payments, and Buy Now Pay Later (BNPL). Online and offline are merging, with consumers shopping in-app for example, and then going in-store to collect their purchases. Digital wallets[8] like Apple Pay and Google Pay are predicted to account for 30% of all point-of-sale payments in 2023. BNPL is predicted to account for around a quarter of ecommerce payments by 2026, as consumers look for flexible payment options to help with the cost of living.
Top tip for 2023: The government’s Help to Grow: Digital scheme[9] could help and is now open to more small businesses. It provides free and impartial advice and a £5,000 discount to invest in productivity-enhancing software including e-commerce, customer relationship management and accounting software.
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Find out moreTrend 5: Immersive customer experience
Creating inspiring and enjoyable experiences for your customers has always been key, but it will become even more important in 2023. With the cost-of-living crisis, consumers are likely to think harder about where they spend their money, and who with.
Computer generated environments offer small businesses the opportunity to transform the customer experience online. From virtual walkthroughs enabling people to experience real and planned spaces, to product simulations sharing your design and manufacturing journey.
For example, online furniture retailer, Wayfair offers its customers a range of shopping tools. From interior design advice to the ability to create a virtual version of your home via a smartphone, so you can try before you buy, all enabled by augmented reality (AR) technologies.
Top tip for 2023: Immersive customer experience will take your customers beyond your products and services and show them why they should choose you.
Trend 6: Founder-led brands
You could be your business’s biggest asset – many investors are drawn to founder-led companies because of their expertise, leadership, and motivation to think long-term. As a small business founder, you’ve put a huge amount of time, experience, hard work and money into your company. You may also have started your business as a passion project, or to solve an issue in your sector, giving you a clear purpose and vision, and the determination to get there.
As a founder, you can embody your brand and act as an influencer to show how your business is unique and purpose-led. One of the ways you can do this is through founder-led marketing. From sharing your story and mission as a founder, to leveraging your expertise and becoming a thought leader in your sector, using platforms like social media and podcasts.
Top tip for 2023: Purpose remains a key trend for 2023, underpinned by a robust ESG strategy.
Where next?
The trends above are opening up new opportunities for small business owners. From the green economy and growing sectors like health and wellbeing, to new trends in established sectors, such as re-commerce in retail.
Taking a deep dive into the small business trends will help you identify potential gaps in the market. Data will be key. For example, search engine data can help you find the products and services customers are looking for. It can also help you spot challenges that your business could help solve. Alongside this, customer feedback data is a goldmine of information, helping you to improve your marketing, your products and services and identify emerging trends. This insight is invaluable, regardless of which industry you operate in.
2023 will be challenging but also full of opportunities for small businesses with the agility to respond fast to changing trends.
How can we help?
In another year of rapid change, businesses will need to ensure they have the right safeguards in place – including business credit checking tools for new customers and suppliers, and keeping on top of their finances to protect cash flow.
We provide tools and solutions to help small businesses make better decisions about their suppliers and customers, understand and manage their own business credit score, and improve their marketing with market leading business data tools:
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- Experian Business Express allows you to run credit checks and monitor any company you work with, so you can spot signs of trouble early on and make informed decisions.
- With My Business Profile, you get full visibility of your business credit profile, enabling you to understand what’s affecting your company credit score and preventing you from being able to obtain that all important company finance.
- BusinessView helps you find new customers fast. Your small business marketing relies on up-to-date business marketing data. Knowing that your data is segmented and targeted to your most profitable business prospects means you can lower your marketing costs and conduct your sales campaigns with confidence.
Sources
[1] More than half of UK SMEs have invested in sustainability in the last year, Startups
[2] How consumers are embracing sustainability, Deloitte
[3] Link between ESG and profitability exists: New research, Moore Global, Capital Monitor
[4] 82% of FTSE 100 companies now aim for ‘Net Zero’ emissions by 2050, Boodle Hatfield
[5] Arla Foods to pay farmers more for milk under sustainability incentive, Just Food
[6] Digital Britain: How small businesses are turning the tide on tech, Sage
[7] How our spending has changed since the end of coronavirus (COVID-19) restrictions, ONS
[8] Payment Trends, Shopify
[9] Changes to Help to Grow: Digital open the scheme to more small businesses, techUK