Trend spotting: This is how 2024 will be for small business owners

After a tough few years for Sweden's entrepreneurs, it finally looks like we are moving towards brighter times. 2023 was marked by high inflation, rising interest rates and a sharp increase in the number of bankruptcies. However, if the concern clouds gathered at the beginning of 2023, we will now begin to see a brightening on the horizon in early 2024 instead. The Institute for Economic Affairs predicts that wages will rise faster than prices during the year, and after two years of increases in the key interest rate, the Riksbank is expected to lower it in 2024. This will give both households and businesses more room for consumption and investment. This may particularly benefit smaller companies, which are generally more sensitive to interest rates and have less room to face tougher times compared to large ones.

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In addition to the economy, there are trends in artificial intelligence, marketing and customer relations that are valuable for entrepreneurs to keep track of and which we will review in this article.

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Financials

As I said, the biggest area that will concern entrepreneurs will continue to be the economy and economic development. Inflation fell by the end of 2023 to levels just above the Riksbank's inflation target of 2 per cent and is expected to fall further during the year. High inflation has been the driving factor for the Riksbank's increases in the key interest rate, and as it now falls, the Riksbank is expected to lower the key rate during the year, which will mean relief for entrepreneurs on several fronts. Lowering the key interest rate leads to a decrease in interest expenditure for both individuals and businesses, thereby increasing the scope for consumption. Entrepreneurs can thus look forward to a year with less headwinds and in which sales revenue increases and financial stress decreases. Reductions in interest rates may also lead to improved opportunities for entrepreneurs to raise external capital, as well as the conditions for doing the same. Investments and investments that have been left aside in recent years therefore have the potential to disappear when it becomes easier to finance them again.

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Looking ahead, the government also presented two proposals in the autumn 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 small businesses will not have to add and account for VAT. The second is that they have launched a simplification package and set up a simplification council to work to reduce the regulatory burden and administrative costs for businesses in order to free up more time for core activities.

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Artificial Intelligence

One of the major themes of 2023 was the development and advancement of AI on a broad front. AI and machine learning have really been a part of our lives for a long time without us really reflecting on it, but as the development of generative AI in the last year has seen an explosion of interest in AI. For entrepreneurs in general, and smaller companies in particular, developments in AI represent great opportunities ahead. Many administrative tasks that previously had to be done manually may be automated with the help of AI, future projections will be more accurate and tasks that previously required external expertise will be carried out by the companies themselves in the future. As an entrepreneur, there is therefore value in starting to understand how AI could be used in your company to free up time and contribute to increased growth.

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Marketing

The conditions for success in marketing as an entrepreneur have improved significantly in recent years. It no longer takes either an agency, expensive equipment or a huge media budget to produce high-quality material and disseminate it. Most entrepreneurs today can manage marketing themselves with the help of digital tools, a plan for what the marketing will accomplish and continuously allocate time for it. Marketing is also one area where generative AI may have the greatest impact for entrepreneurs as it will simplify everything from the production of text and visual materials, to the development of plans and media investments. Something that will free up time that can instead be spent on analyzing trends and customer behaviors in order to then be able to adjust the marketing accordingly.

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Customer relations

As the economic pressure likely decreases and the purchasing power of society increases, it also means that entrepreneurs will have to spend less of their time being reactive and can instead start looking ahead and being more long-term in their priorities. One area that will therefore receive increased focus is trying to build strong and long-term customer relationships. Technological developments make it possible for smaller companies to offer customised 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' behaviors and preferences, thereby producing more targeted, relevant and personalized offerings.

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