When it comes to money in our personal lives, we are accustomed to immediacy, efficiency, convenience, and security, whether paying a bill or managing our finances. The same cannot always be said for small businesses, yet the ability to effortlessly and securely manage money increasingly underpins their success. Thankfully, digital innovation is narrowing this gap.
Digitization enables SMBs to pay and get paid faster and more securely than ever, and it is dramatically re-shaping how entrepreneurs build and run their businesses. Small businesses are a vital backbone of our global economy encompassing 90% of businesses and more than 50% of employment worldwide and Visa’s priority is to help them thrive every step of the way.
In 2023, the “consumerization of business finance” will benefit small businesses in big ways as they work to meet the pressures and opportunities of an uncertain economic environment. As we turn the page into a new year, following are five related trends we see as pivotal for small businesses in the year ahead.
- Small businesses can win the war for talent with heart
Small businesses have inherent disadvantages when it comes to attracting top talent: the lack of a company gym, cafeterias offering free meals, or complementary transit or parking. But they can and should compete in other ways. They can provide employees with better work-life balance and a greater sense of personal purpose – two qualities a Gallup poll found almost as important to potential employees as salaries and benefits.1 SMBs would do well to ensure every talent touchpoint – website, social media, marketing collateral – drives a personal, professional and optimized experience that reflects their values. Customer testimonials, employee stories, etc. will help SMBs differentiate themselves from their competitors – large and small2 – and appeal to a talent pool that remains highly competitive.
- Closing the digital equity gap will continue to drive SMB competitiveness
The World Economic Forum predicts that 70% of new value created in this decade will be based on digitally enabled technologies.3 With livelihoods and well-being increasingly determined by participation in the digital economy, this rapid transition can provide opportunity for everyone, everywhere. We need to include small businesses in this discussion so that people can pay conveniently, easily and securely and so that businesses can reach new customers, run more efficiently and grow. This will also increase business resilience, be it in times of economic downturns or a big external shock like the pandemic. In the early days of the pandemic in 2020, Visa set a goal to digitally enable 50 million small and micro businesses by the end of 2023 to support recovery from the pandemic. I’m thrilled to report that we have helped digitally enable over 40 million already.4
- SMBs will need to put trust and security at the top of their agenda
Small businesses, because of their high touch, community orientation and accessibility, are the single-most trusted institutions in the U.S. According to a Gallup Poll, 68% of respondents rated small businesses as trustworthy, compared with 17% of large enterprises.5 Trust, however, is fragile and needs to be nurtured. Security lapses can have lasting consequences for a business, and because of their perceived vulnerability, small businesses can find themselves at significantly higher risk of cyberattacks. To safeguard themselves and their customers, SMBs should prioritize ensuring they are utilizing the proper security technology. Tokenized payments and industry standards such as EMV®3-D Secure, for example, can help reduce fraud by securing the payment environment both online and at physical points of sale.
- A 360-degree approach to digitization will be a key asset for SMBs
In order to fully realize the benefits of digital commerce, how a small business pays its vendors, suppliers and partners is as important as how it receives payments from customers. While consumer payments can get most of the attention, digital solutions have made it easier to automate and track payments to the outside partners who help keep a small business running. In 2023, I expect to see SMBs embracing the “consumerization of B2B payments.” SMBs will continue to set themselves up for ecommerce and online payments, but also increase their focus on embracing financial tools and apps that can help with planning, cash-flow, budgeting, expense tracking and tax preparation, among others. As these apps become increasingly integrated, small business owners will be able to run their business largely from the palm of their hand.
- Agility will be key in (yet another) year of uncertainty
Similarly to 2022, high inflation, workforce constraints and supply chain challenges will be a factor for all businesses, including SMBs, in 2023. SMBs will need to be agile to succeed. According to Visa research, 86% of surveyed small business leaders cite economic uncertainty as one of their most common stressors. Cloud computing, artificial intelligence (AI), and digital financial tools can help SMBs navigate ongoing uncertainty. If this sounds far afield, recent research has shown that 44% of surveyed small business leaders are either integrating AI, preparing to, or closely following the trend.6 Although it’s early days, I am personally excited to see how ChatGPT AI can be applied to real-world scenarios for SMBs. If any of this feels overwhelming, know that acquirers and payment facilitators – who specialize in supporting small businesses nuanced needs – are there to help make this simple.
As a company that enables digital payments at more than 80 million merchant locations around the world, Visa’s commitment to small businesses is long-term and unwavering. Without a doubt, there is tremendous opportunity for small businesses to grow and increase the resiliency of their operations in 2023 and beyond no matter how predictably unpredictable the year ahead may be.