Early in the new year is always the time of year to reflect on the previous year and to set expectations and goals for the coming year. For many businesses, especially SMEs, 2023 proved to be a very difficult year for numerous reasons. Will 2024 prove to be any better and how much influence can entrepreneurs have over their own destiny?
There is, of course, no such thing as a crystal ball, and any forecast of the future is only based on the facts as we know them now. To paraphrase Donald Rumsfeld, the US Defense Secretary in 2002, “we don’t know what we don’t know”, but that is always the main problem with predicting the future.
Global events such as the pandemic, a ship grounding in the Suez Canal, war in Ukraine, conflict in Israel, and even Brexit closer to home, were all broadly unexpected events but all have had a great impact on the wider economy and businesses in the UK as a whole. From an economic perspective, interest rates were still rising in 2023 and inflation remained stubbornly high. These were just some of the macro level factors that businesses struggled to contend with last year. Other factors such as lack of staff, especially in the hospitality sector, rapidly growing staff expenses, strikes, and so much more, added to the challenges.
On balance, 2024 would appear to have more favourable prospects than 2023 did at this stage last year and this is evidenced in a number of new reports. According to a large new survey by Iwoca, one of Europe’s largest lenders to SMEs, almost half of the respondents expected their revenues to increase this year, compared to only 26% at the same time last year. The financial markets are betting on a series of interest rate cuts this year in response to a slowing economy and a reduction in inflation, and this in turn should stimulate customer spending and assist small businesses by reducing costs and increasing takings.
S&P Global Ratings has also reported that the number of credit upgrades for UK companies has surpassed the number of downgrades for the first time in a decade, and this despite the fact that many companies are now struggling with repaying covid bailout loans.
One of the unknowns in 2024 is on the political front, with over four billion people eligible to vote in an election around the world, including in the UK. Sadly, and rather damningly for UK politics, the same Iwoca survey showed that 43 per cent of small businesses did not care about the outcome of the election and 35 per cent believe that neither of the main party leaders understood the needs of SMEs or the sector and so policies would not be supportive of their growth ambitions. The positive way to interpret this is that whatever the outcome, small business will push on regardless and focus on challenges that they believe they can influence. One thing seems sure though, governments from all sides of the political spectrum need to focus more on understanding and supporting SMEs. Perhaps 2024 will be the year that we see that shift start to happen whatever the outcome of the election.
With so much going on from a global perspective as well as from a more local general political and economic view, how much actual control does any founder or business leader actually have over the destiny of their own business? The answer is simple, the best companies that are run most efficiently and recognise true customer needs will survive, whilst those businesses with outdated systems and procedures, products, and thinking, or those that are badly run financially, will not.
Whilst 2024 is sure to bring some difficult challenges because of the ‘unknown unknowns’, it would seem that at least the ‘known unknowns’ are more favourable than last year. Whatever the outcome of the election, the moral of the story is that if you run a tight ship the headwinds might just be easing.
