Source: https://www.paychex.com/articles/management/small-business-trends

Small Business Trends in 2024

Staying on top of new business trends means understanding what technologies, practices, and strategies are considerably impacting organizations across industries. Those looking to gain a competitive edge can go a step further and strategize how to embrace and implement small business trends into their business to level up the organization.

1. Preparing for Economic Uncertainties

The Federal Reserve has raised interest rates 11 times since March 2022 to cool inflation and has recently indicated that rates may fall in 2024. However, there is no certainty about where the U.S. economy is headed. Economic uncertainties allow businesses to focus on controlling what they can. For example, high interest rates could mean business financing is more expensive now. Putting a system in place to manage cash flow can better prepare you for business ups and downs.

And don't forget how economic challenges may impact your employees. The cost of living in the U.S. has skyrocketed, affecting both employees' salaries and employers' budgets as they try to remain competitive and keep great workers. Take time to weigh factors such as competition in the labor market, budgets, and business projections to determine whether pay increases make sense this year.

2. A Demand for Seamless Customer Experiences

Although digital experiences have become common, consumers' shopping habits are shifting again. Whether driven by increased awareness to reduce monetary and carbon costs associated with shipping, lending support for their local economy, or simply wanting the experience of shopping in-person again, consumers are embracing a hybrid or omnichannel approach to shopping, with the expectation that there will be a seamless experience as they go from online to in-person with the same brand. They will interchange visits to brick-and-mortar stores, use mobile apps, and shop online to make choices that support their needs and beliefs.

To ensure success, small business owners should have a mobile-friendly, easy-to-navigate website with e-commerce options that allow consumers to quickly find what they want and purchase products or services from their mobile devices. The same attention to detail should be applied to traditional shopping methods. Look for ways to continue the convenience of blending the two, such as curbside pickups, and make sure your in-store service leaves customers with a positive experience.

3. Strategic Use and Regulation of AI

Artificial intelligence continues to grab headlines as its influence on businesses grows. The 2023 Paychex Pulse of HR Survey found that over 75% of HR leaders in companies with 20 or more employees said they will use AI in the next 12 months to help managers and HR leaders find more time for strategic work.

What are some popular ways small businesses can leverage AI?

• Using AI chat functionality to collect and uncover employees' priorities and concerns
• Synthesizing data on employee and company performance
• Helping to attract potential candidates with AI-generated custom ads online
• Resume scoring/ranking
• Automating application tracking and conducting interviews

For all its upsides, AI also has limitations, including the potential to introduce bias, threaten copyright protections, and weaken protections around an individual's privacy. Federal, state, and local governments have begun taking regulatory action to ensure AI technology continues to be developed ethically and used responsibly. Business owners must be aware of all the regulatory requirements in the various jurisdictions where they conduct business, including audits and disclosure requirements at the state and local levels.

4. Increased Focus on Sustainability

Growing concerns around how habits, purchasing decisions, and lifestyles impact the environment have cemented the issue of sustainability firmly in many customers' decisions — from which companies they do business with to the types of goods and services they choose to buy.

To effectively embrace this trend and respond meaningfully, employers must consider the environmental impact of their business model. Look for opportunities to reduce the energy consumption and greenhouse gas output of your supply chain, assess your internal practices to reduce waste, consider remote or hybrid workplaces for employees, and evaluate your own business's long-term environmental impacts in the form of packaging and product lines. Ultimately, these measures can help your business gain a hiring advantage and increase its resiliency through being more efficient and responsive to environmental pressures.

5. Alternative Payment Options

As payment processing evolves and more options become available for safer non-cash transactions, consumers are using mobile, card, and alternative payments more often. The onset of new technology, combined with the rising demand for contactless payments, has further hastened the shift away from cash transactions. Small business owners should continue to expect increased demand for alternate payment options in the form of apps, mobile wallets, and wearable devices. If they haven't already done so, small businesses should research contactless payment options. Fortunately, this trend reaps benefits such as a business's ability to leverage the systems to increase sales, improve cash flow, and reduce the risk of accepting fraudulent currency.

6. Continued Focus on Employee Development

New performance management techniques are transforming the way businesses prioritize their retention efforts. For instance, investing in learning management can help employees further develop key skill areas and better immerse themselves in the company culture. Upskilling (training that builds upon an employee's current skills), reskilling (training an employee for an entirely different job), and employee training programs can provide your workers with what they're looking for professionally, helping you invest in the future of the small business.

7. Updated Wage and Hour Laws Expected

While certainly not new, a focus on HR compliance should always be top of mind for businesses of all sizes. Specifically, the U.S. Department of Labor expects to release its new overtime rule in April 2024. The current Final Rule on overtime exemptions has been in effect since Jan. 1, 2020, and, at its implementation, made 1.3 million American workers newly eligible for overtime. Employers should prepare for the potential impacts on their business, including which employees will be impacted, how it will affect budgets, procedures related to payroll, and even morale if wage compression comes into play. For employers who must also consider state, local, and even industry-specific wage and hour laws and regulations, these compliance matters could present a complex business challenge in 2024.

Overall, there should be a clear strategy for bridging the gap between the company's development, objectives, and compliance practices that influence hiring, employee development, and retention. If you haven't done so in the past, this year may be a perfect time to develop an HR compliance checklist that can serve as a compass for compliance-related areas.

Which Industries Are Projected To Boom in 2024?

Certain fields are expected to see continued innovation, growth, and investment in the next decade, stemming from shifting consumer preferences, an increasingly online world, and the effects of an aging population. Some of the industries that are projected to boom in the upcoming years, as forecasted by the U.S. Bureau of Labor Statistics, include:

• Health care and social assistance: This sector is projected to add about 2.1 million jobs from 2022 to 2032 — the most of any sector, faster than any other sector, and about 45% of all new jobs, the BLS projects. Employment growth in the health care and social assistance sector is expected to be driven by both the aging population and a higher prevalence of chronic conditions such as heart disease, cancer, and diabetes. Various healthcare occupations involved with the increased care of the aging population, including home health and personal care aides, nurse practitioners, and medical and health services managers, are projected to experience significant increases in employment and rapid growth.
• Computer systems design: Employment opportunities in computer systems design and related services are expected to arise because of the growing demand for information technology and cybersecurity products and services. This industry is projected to add more than 470,000 jobs in the next 10 years, the second most of any industry.
• Renewable energy: Clean and renewable energy has increased significantly over the last decade, and the BLS expects it to expand considerably through 2032. A boom in the energy market has been driven by several critical factors, including lower production costs compared with fossil fuel electric power generation. Government policies and technological advancements in renewable energy infrastructure and battery storage have also played a significant role in the transition to clean energy.
• Transportation and warehousing: The growth of the digital economy and e-commerce is expected to support solid job growth across the transportation and warehousing sectors, both of which rank among the top 5 fastest growing sectors. During the 2010s, e-commerce was already competing with brick-and-mortar retail stores. The onset of COVID-19 accelerated this trend, prompting consumers to shift their spending online. Although consumers have returned to their pre-pandemic spending patterns, e-commerce activity remains strong.

What Are the Biggest Business Concerns in 2024?

Business ownership is never without challenges, but how employers respond could determine how well they navigate uncertainties in 2024. Some challenges small businesses could face this year are:

• Competition to become an employer of choice: The days of quiet quitting and the Great Resignation may be behind us, but businesses are still vying for top talent and finding effective ways to hire and keep great employees. Employers must differentiate their brand from competitors by creating positive candidate and employee experiences.
• Impact of inflation and pressure to control costs: Rising prices remain one of the biggest challenges for businesses and individuals. In addition to raising prices to keep up with the rising cost of materials, businesses must also contend with managing expectations around employee incentives such as robust benefits, rewards packages, and pay increases.
• Employee burnout: Increased pressure in and out of the workplace, paired with long-term effects and strain individuals experienced during the pandemic, have left many employees burned out — that is, emotionally and physically exhausted from their job and personal stress that ultimately affects their performance. Employers must design a work environment where employees are challenged, engaged, and productive rather than overwhelmed.
• Maintaining regulatory compliance: Business owners need to keep pace with many laws and regulations. In addition to the anticipated updated overtime rule mentioned above, minimum wage increases, workplace safety laws, paid family and medical leave, and changes to retirement plans are just some of the regulatory issues businesses need to be aware of in 2024 and beyond. HR compliance can quickly become overwhelming for businesses that aren't prepared.
• Cybersecurity risks: The growing dependence on online technology and cloud computing has significantly increased the risks of cyberattacks. Pandemic-driven growth of remote and disparate workforces has also increased the risks related to cybersecurity and costly data breaches. Maintaining stringent security protocols is a top priority for businesses that are prioritizing data security and mitigating cyber threats.

Use Emerging Trends in Business To Drive Your Success

Businesses today must contend with era-defining changes, a significantly reshaped workplace, and navigating professional challenges, all of which require a keen understanding of future business trends in 2024. As you think strategically about key business decisions, consider outsourcing other duties that require valuable time and resources, such as HR administration, payroll, and assistance with regulatory compliance.