As some of us begin a new financial year, it’s time to reflect on trends from the year that’s been. The 2018 financial year continued the dramatic trend of change that small and medium sized businesses have been experiencing for the last few years. If the last few years are anything to go by, the 2019 financial year is poised to continue that trend of change – from IT to marketing to economic conditions, everything is ripe for disruption. Here are a few key predictions for the year ahead.
At the end of 2017, many commentators speculated that marketing would continue to become increasingly personalised in 2018 and beyond. That’s largely a safe bet – businesses understand the advantages of speaking directly to specific consumers. Consumers generally respond positively to more targeted marketing – the result being that each consumer receives content that is relevant to their tastes and interests.
Against this, the social licence for businesses to leverage consumers’ personal information in this way is under threat. Recent privacy scandals involving well known brands, such as Equifax and Facebook, are leading consumers to think more closely about the information they entrust to commercial entities. These are challenging times for marketers – in addition to complying with relevant privacy legislation, businesses that collect personal data need to think closely about consumer expectations and consumer trust.
More than ever before, financial year 2019 is likely to see the failure of businesses that have failed to move with the times. Businesses that leverage technologies like the cloud, remote working and data science are achieving much stronger results than businesses which work locally and don’t gather detailed performance metrics. For example, food and beverage manufacturers are seeing strong efficiency and reliability gains from using food manufacturing software. Broadly, businesses that avoid technology will need to have a particularly strong point of difference to remain competitive and relevant.
The Internet of Things (IoT) is likely to change the game for many SMEs this year and beyond – providers in many countries are rolling out IoT specific networks, providing a platform for smart machines to talk to other smart machines. In inventory and logistics, the IoT is expected to remove a lot of manual effort – just as with previous innovations such as barcode scanning and food manufacturing software, the IoT is likely to result in significant cost savings for logistics services and improve on time performance.
Economic and Financial Trends
Predicting economic and financial trends is notoriously difficult; although there is some common ground, commentators don’t always agree on the economic conditions that small and medium sized businesses are likely to face. What is clear, however, is that businesses need to be prepared for adverse economic conditions. This is not to say that the current economic boom is likely to turn to a bust; rather, small businesses constantly face a risk that economic conditions will turn and should maintain a healthy focus on efficiency, competitiveness and financial health. Many small businesses are doing this already – distributors are aiming to rein in transport costs, while food and beverage manufacturers are turning to food manufacturing software to reduce high levels of waste. In financial year 2019 and beyond, small businesses should keep an eye on their financial ratios, remain cautious about debt levels and avoid carrying too large a balance of buffer inventory.