By Jay Jung
While many of us looked forward to the end of 2021, this year presents its own challenges–some familiar, some new. Here’s a list of the top five trends that will affect small and medium-sized businesses (SMBs) in 2022.
- Increases in customer acquisition costs are already a significant headwind for SMBs. Emerging from the holiday season, SMBs that run proper analytics are realizing that Apple’s updated Identifier for Advertisers (IDFA) policies, rolled out in April 2021, have made it much more expensive to market themselves.
- Middle-market private equity (PE) firms continue to raise more capital as the size of PE funds become ever larger and valuations remain robust. This year, cash-rich PE firms will be on the hunt for well-managed SMBs. Despite inflation and a bumpy economic forecast, buyer appetite is still strong; therefore, 2022 will prove to be an attractive window for would-be sellers.
- Hiring will continue to be a constraint–even more so than capital. Strong sales people, technical staff, trade-skill workers and software developers will continue to be in heightened demand and wages will continue increasing. This will drive innovating hiring solutions in 2022.
- The hybrid workforce will become the norm this year. Even with some offices opening up and many workers returning to the office at companies large and small, many people will continue to seek out remote work, and for a variety of reasons. SMBs, starved for talent, will recruit beyond their old geographic boundaries and will organically morph into a hybrid workforce wherein some workers stay in the office while others collaborate remotely. However, few employees will probably be required to be in the office five days a week this year–or in the future.
- Inflation will be felt throughout the organization in 2022. The United States has not seen 6% inflation in the last 25 years and some metrics have inflation running at a four-decade high. Many entrepreneurs and/or SMB owners don’t yet understand how elevated price levels–from materials, labor, transportation and so forth–will impact their financial performance. Learning what actions to take both preemptively and reactively will be a key management challenge and focal point this year.
Jay Jung is the founder and managing partner at Embarc Advisors. which brings Fortune 500-level financial consultations to middle-market, SMBs and startups. Jay has nearly 20 years of experience in M&A, capital-raising and corporate finance as a former Goldman Sachs Investment Banking Vice President and McKinsey & Company Engagement Manager.