Over the past two years, business owners have been forced to adapt, pivot and innovate to thrive in an ever-changing world. The uncertainty created by the pandemic, the worldwide supply chain chaos, fears over climate change, and the lightning-fast evolution of consumer behaviours have created a melting pot of challenges and opportunities. But what does 2022 have in store for these entrepreneurs? How can leaders best prepare their organisations for what lies ahead? Where should you direct investment and resource? Here are the five business trends that will determine the success – or failure – of businesses large and small in the coming year.
What are 2022’s business trends?
People, planet, profit
The most significant trend of 2022 concerns environmental, social and corporate governance (ESG). Every business owner should have this on their radar, according to Jenny Kitchen, founder of digital agency Yoyo Design Link opens in a new window. “This trend has been gaining momentum over the last five years but over the last 18 months, there’s been a real shift,” she explains. “People are looking at every aspect of their lives and asking, ‘How can we make the world a better place? More equal and fair? Kinder to the planet?’ These people are your customers, your staff and your investors.” Kitchen, who embarked on the journey to becoming a B Corp in 2019, believes that gaining that accreditation – and signing a legally binding agreement to prioritise ESG – was the best thing to happen to her business. From winning new clients seeking better suppliers to reducing bills through greener initiatives, Yoyo Design has gone from strength to strength over the past two years: “I think around 90pc of the clients we talk to - from charities to corporates - have some kind of sustainability as part of their brief,” she says. It can be hard to know where to start, however. B Corp’s accreditation is an established route and business leaders can also access support from Virgin Money’s Sustainable Business Coach Link opens in a new window, an app that can help you set goals and make more people-and-planet-positive business decisions. Kitchen reveals: “When I speak to my fellow business owners about what matters to them in 2022, sustainability and social impact are top of mind.”
“Over the past two years, we learned that the key to a thriving company is keeping your people safe, secure and feeling loved,” says Joanna Swash, CEO of Wrexham-based Moneypenny Link opens in a new window, the global virtual PA and answering service. “We have 890 people in the UK alone and they all have different needs and worries. We have always tried to treat every single person who works here as an individual, but the pandemic has really focused our efforts.” In 2022, Swash believes that all leaders will need to stop thinking about a “one-size-fits-all approach to HR” and instead “have empathy for every single person who works for you”. She explains: “2022 is the year that companies stop thinking about workforce and instead think of their people as a community or a family.” At Moneypenny, this has been achieved through a distributed HR strategy. Groups of four PAs have a team leader, and every four teams have a team manager. “The idea is that you always have someone close to you knowing what you need, with the authority to make it happen,” says Swash. “You have to empower individuals to make the right decisions and, if mistakes happen, help them to fix them quickly.” There are significant benefits to treating every employee as a valued part of the family, she says: “They will be more loyal, stay longer, have more accountability within the organisation, and if someone’s not happy, they will tell you and give you a chance to help them.”
At Virgin Money, we’ve introduced a brighter way of working called 'A Life More Virgin' Link opens in a new window which brings our colleagues more choice, control and flexibility to live and work how they choose. It also gives colleagues five extra paid well-being days a year to help them switch off and recharge as well as many more brilliant benefits.
Establishing a good work-life balance is essential. For sole traders and those who run their businesses by themselves it can be easy to fall into the trap of working around the clock and not setting work-life boundaries. But it’s paramount that you do. Creating habits such as: setting a hard finishing time each day, having a defined workspace, and having a work phone that’s separate to your personal one can help create a healthy work-life balance that’ll help with your mental wellbeing and prevent burnout.
Digital-first, whatever the sector
In 2022, every business must prioritise its digital offering and advertising. Online shopping continues to gain traction across every global market, with the Digital Advertising Global Market Report 2022 Link opens in a new window forecasting that global digital spend will rise from $178.60bn in 2021 to $208.00bn in 2022 at a compound annual growth rate of 16.5%. For Ryan Panchoo, founder of gluten-free, vegan doughnut brand Borough22 Link opens in a new window, this prediction rings true. “I’ll be focusing a lot of attention on our website in 2022,” he reveals. “We want to get more people shopping with us online, and make sure they have the best digital experience possible. There’s no limit to your growth when people can buy direct from your site, unlike in wholesale where you’re limited by the shelf space in your retailers. And nothing beats the direct connection you have with customers when they interact with your brand online.” According to Panchoo, this will be the year business owners from all sectors start analysing their online performance more carefully. “We’ve really drilled down into our analytics now,” he says. “This has prompted us to drastically simplify our nutritional information. Instead of listing everything in each doughnut, we just tell people about allergens to make it more accessible.” Borough22, which is based in southeast London, has seen online orders surge 40% in 2021, and is expecting similar results in 2022. “We have the opportunity to grow ever more once we get better at analysing why online carts are abandoned and how to get in front of customers in a more precise way.”
Mobile shopping through social media platforms will also continue to grow in 2022. Especially on Instagram with 70% of shopping enthusiasts turning to Instagram for product discovery Link opens in a new window. Laura Dover, Global Digital Communication Manager at Barbour said, “Since we started to use the feature (Instagram shop), our sales from Instagram have increased by 42% and traffic to our website from Instagram is up 98%”. According to Instagram, 130 million Instagram accounts tap on a shopping post to learn more about products every month.
The battle with rising costs
The cost pressures that have arisen during 2021 will be a real concern for business owners in 2022. “Since the global financial crisis, we have been blessed with low inflation and low interest rates,” says serial entrepreneur Simon Duffy, founder of ethical men’s skincare brand Bulldog Link opens in a new window and sustainable oral hygiene start-up Waken Link opens in a new window. “In December, the Bank of England raised interest rates from 0.1pc to 0.25% and business leaders are now watching to see whether we move into systematic higher inflation.” Inflation is forecast to peak at 6pc in the Spring of 2022 Link opens in a new window, according to the International Monetary Fund. “What will that mean for small business, many of which have big Covid debts to pay?” asks Duffy. “We’re seeing inflation on everything from labour to ingredients to packaging cardboard. Factory gate inflation is currently at 10pc.” While larger businesses can absorb increased costs, small companies may struggle to pass on price increases to customers, especially if they sell through the UK supermarkets, he warns. But small businesses do have an ace up their sleeve. Duffy says: “We are more agile and more innovative than big corporations, and we can leverage some of our unique selling points, such as sustainability and our understanding of our target customers, to compete.” So, make sure you’re watching your costs, monitoring margin, and keeping a close eye on the supply chain.
Business confidence took a tumble in December, as leaders reacted to market uncertainty. According to the most recent IoD Directors' Economic Confidence Index, 33% of company directors said they expected investment to be higher in the next year and 15% expected it lower in November 2021 but by December the corresponding proportions were 31% higher and 18% lower. This will prompt many to reduce or stop all investment in their companies as they wait for more favourable conditions. Battening down the hatches again is a mistake, according to Martin Port, the serial entrepreneur behind Leeds-based software house BigChange Link opens in a new window. “The best leaders will prioritise product development in 2022,” he says. “Many have been holding back on investment – especially in 2020 – but in 2022 we need to be more bullish on growth and get more comfortable with the ongoing uncertainty. At BigChange, we have continued to innovate but we made smaller changes. It’s time for ambition and a focus on meaty, game-changing innovations.” Port has earmarked £25m to invest in new products. “We have 100 people in our development team now,” he says, “That will help us take our annual recurring revenues from £20m to £80m.”
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