Trendspotting: What 2024 will be like for small businesses

After a few tough years for Sweden's entrepreneurs, it finally looks like we're heading for brighter times. 2023 was marked by high inflation, rising interest rates and a sharp increase in the number of bankruptcies. But if the storm clouds were gathering at the beginning of 2023, we are now starting to see a brighter picture on the horizon at the beginning of 2024. The National Institute of Economic Research predicts that wages will rise faster than prices during the year and, after two years of policy rate hikes, the Riksbank is expected to cut it in 2024. This will give both households and companies greater scope for consumption and investment. This may benefit smaller companies in particular, which are generally more sensitive to interest rates and have less room to face tougher times than larger ones. 

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Beyond the economy, there are trends in artificial intelligence, marketing and customer relations that are worth keeping an eye on for business owners, which we'll cover in this article.

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Economy 

As mentioned, the biggest area that will affect entrepreneurs will continue to be the economy and economic developments. Inflation fell at the end of 2023 to levels just above the Riksbank's inflation target of 2% and is expected to fall further during the year. High inflation has been the driving factor behind the Riksbank's increases in the policy rate and as it now falls, the Riksbank is expected to cut the policy rate during the year, which will mean relief for entrepreneurs on several fronts. A cut in the policy rate will lead to a reduction in interest expenditure for both individuals and companies, thereby increasing the scope for consumption. Business owners can thus look forward to a year with fewer headwinds, where sales revenues increase and economic stress decreases. Interest rate cuts may also mean that opportunities for entrepreneurs to raise external capital, and the conditions for doing so, will improve. Initiatives and investments that have been put on hold in recent years therefore have the potential to be realized when it becomes easier to finance them again. 

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Looking ahead, the government also presented two proposals in the fall budget that will make it easier for entrepreneurs both in terms of costs and administration. One is that the turnover limit for when companies need to report VAT is planned to be raised from SEK 80,000 to SEK 120,000 on January 1, 2025. Thus, more smaller companies will not have to add and account for VAT. The second is that they have launched a simplification package and established a simplification council that will work to reduce the regulatory burden and administrative costs for companies in order to free up more time for core business. 

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Artificial intelligence

One of the major themes of 2023 was the development and widespread adoption of AI. AI and machine learning have actually been part of our lives for a long time without us really reflecting on it, but with the developments in generative AI over the past year, interest in AI has completely exploded. For business owners in general, and small businesses in particular, developments in AI offer great opportunities for the future. Many administrative tasks that previously needed to be done manually can be automated with the help of AI, future projections will become more accurate and tasks that previously required external expertise will be able to be performed by the companies themselves in the future. As an entrepreneur, there is therefore value in starting to familiarize yourself with how AI could be used in your business to both free up time and contribute to increased growth. 

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Marketing

The conditions for successful marketing as an entrepreneur have improved significantly in recent years. You no longer need an agency, expensive equipment or a huge media budget to produce high-quality materials and get them distributed. Most entrepreneurs can now do their own marketing with the help of digital tools, a plan for what they want to achieve, and a continuous commitment of time. Marketing is also an area where generative AI can have the greatest impact for entrepreneurs as it will simplify everything from the production of text and visual material, to the development of plans and media investments. Something that will free up time that can instead be spent on analyzing trends and customer behavior in order to adapt marketing accordingly.

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Customer relations

As economic pressures are likely to ease and purchasing power in society increases, it also means that entrepreneurs will need to spend less of their time being reactive and can instead start to look ahead and be more long-term in their priorities. One area that is therefore likely to receive increased focus is trying to build strong and long-term customer relationships. Technological developments mean that it will be possible for smaller companies to offer tailored customer experiences in a way that previously only larger companies with extensive resources could do. AI will also make available more advanced data analytics that business owners can use to better understand their customers' behaviours and preferences, and thus develop more targeted, relevant and personalized offers. 

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