2022 Business Strategies for Success 

Research reveals how small and medium-sized businesses (SMBs) can be ready for the opportunities and challenges ahead

A survey of 500 leaders at U.S. SMBs shows a positive business outlook for 2022. Optimism and resilience increase with business size. Medium-sized businesses (with annual revenue between $5 million and $25 million) are the most likely to pivot to an alternate business model, try a different sales channel or adopt new technology, while small businesses (with less than $500,000 in annual revenue) have been forced to reduce staff and cut expenses.

Across SMBs, the top priorities for 2022 are finding and keeping customers, managing costs, paying bills and securing data. To achieve these objectives, businesses are strengthening company finances, focusing on customers, and using tools and technology to drive revenue.

Key Takeaways

1

Price changes are the most common tactic for improving business finances

2

Medium-sized businesses improve billing and secure financing to keep cash flowing; smaller businesses cut expenses

3

Medium-sized businesses outpace smaller businesses in using strategy to boost profits

4

Flexibility and discipline ease supply chain and inflation pressure among SMBs

5

Ease of payments and investment in new technology are key to driving revenue

Read on for detailed survey results and to learn how your business can be ready to make the most of 2022.

Price changes are the most common tactic to improve business finances

Nearly two-thirds of businesses surveyed have worked proactively to shore up company finances over the last year. Medium-sized businesses strengthened their finances to support company growth. Smaller businesses made changes to simply survive.

The most common tactic used to strengthen company finances is price adjustments. More than one-third of companies changed prices, with 58% of those raising prices, 20% lowering them, and the rest raising some prices and lowering others.

More than 1/3rd of companies surveyed adjusted prices to support financial success.

With today’s supply chain issues, inflationary pressures and ever-evolving customer expectations, it’s essential that businesses have a solid financial foundation. We saw impressive discipline and innovation among companies taking steps to improve their finances—whether that’s a price change or a pivot in offerings—to adapt to changing market dynamics."
- Sarah Lindstrom
Head of Business Banking

Medium-sized businesses improve billing and secure financing to keep cash flowing; smaller businesses cut expenses

Almost one third of businesses surveyed experienced a severe cash crunch in the past year. The top three causes were a decrease in revenue (57%), unexpected cost increases (34%) and customers not paying their bills (25%).

Having sufficient cash reserves and closely monitoring expenses are the top approach for maintaining company resilience. Other go-to financial strategies vary by company size. Medium-sized businesses focus on improving billing and collections to speed up payments and lining up financing to cover shortages. Smaller businesses are most likely to reduce expenses to free up cash. 

PLANNING AND OPERATIONAL EFFICIENCY DRIVES BUSINESS RESILIENCE 1

Having a cash reserve 

66%

Monitoring costs

56%

Reducing expenses

49%

Access to financing

42%

Improved billing and collections

41%

1 How important are each of these financial strategies you might use to improve your company’s overall financial resilience and profitability?

The dynamic business environment is prompting companies to look hard at financial fundamentals. Good cash flow management practices like careful monitoring, planning for shortfalls, and improving collections practices put companies on solid footing. During fast-growth periods these practices are important to sustain momentum; companies facing challenging times need to take these steps to protect viability."
- Manny Tocco
Business Banking Regional Director

Medium-sized businesses outpace smaller businesses in using strategy to boost profits

The majority of businesses surveyed say they’ll attain profitability by prioritizing customers and technology. Medium-sized businesses are the most likely to work strategically toward profitability goals. Businesses with more than $5 million in annual revenue are 50% more likely than smaller businesses to be focused on improving customer service and diversifying revenue streams. The biggest companies in the survey were also 80% more likely than smaller ones to use technology for operational efficiency.

A FOCUS ON FINDING AND KEEPING CUSTOMERS LEADS TO COMPANY PROFITABILITY 2

Greater focus on sales

55%

Improving customer service

55%

Maintaining/increasing employee productivity

48%

Technology to improve efficiency

46%

Launching new products/services or adding new revenue models

37%

2 How important are each of these business strategies you might use to improve your company’s overall financial resilience and profitability?

Businesses are placing almost equal importance on acquiring new customers as they are on retaining their current customers

79%

of businesses are focusing
on customer retention

71%

are concentrating
on customer acquisition

Flexibility and discipline ease supply chain and inflation pressure

Fifty-seven percent of businesses surveyed said limits on access to raw materials, supplies and inventory affected their organization in early 2022. More than 70% felt the impact of inflation. Entrepreneurial problem-solving was essential to meet these challenges head on.

NEW RESOURCES AND SALES STRATEGY PIVOTS HELP EASE SUPPLY CHAIN STRESS

0%

Using different vendors/suppliers
Using
different vendors/suppliers
Using different vendors/suppliers


0%

Selling different products/services
Selling
different products/services
Selling different products/services


0%

Preselling items and fulfilling later


Preselling items and fulfilling later

0%

Offering substitutes for unavailable products
Inflation called for careful financial stewardship. Larger businesses were the most likely to seek financing to cover costs, while those with revenue of less than $5 million raised prices. Across the board, businesses cut costs in all areas to improve their finances."
- Mark Williams
Head of Business Banking Treasury Services

SMALL ADJUSTMENTS CAN HELP FIGHT INFLATION

Raising Prices

34%

Reducing costs by using technology

21%

Cutting costs across all departments

19%

Cutting into our profitability to keep prices competitive

16%

Reformulating/revamping our products to cut costs

11%

70%

More than 70% of businesses surveyed feel the impact of inflation

Ease of payments and investment in new technology are key to driving revenue

Competition for customers is intensifying the imperative to offer multiple payment options. More than 70% of businesses accept the traditional payment options of cash and check. Roughly 60% accept credit and debit cards, and 31% allow electronic funds transfer (EFT) — using an online network to transfer money from one bank account to another. Looking ahead, EFT is the payment option most likely to be adopted in 2022.

More than half of companies currently offer online or mobile payment options. Not surprisingly, medium-sized businesses offer their customers more payment options than smaller businesses do.

BUSINESSES ARE USING TECHNOLOGY IN PAYMENTS, SALES, CUSTOMER SERVICE AND MARKETING TO IMPROVE THEIR PERFORMANCE

39%
Payments (e.g., merchant services)
37%
Bill payment
37%
Sales
32%
Customer service
31%
Marketing

A digital-first mindset is critical for most businesses, so that customers can do business with you how and where they choose. Investing in the right technology will make your business more competitive and efficient."

- Renee Katz
Business Banking Virtual Channel Director

Actions to Consider in 2022

Successful businesses will be those that work proactively to shore up finances, maintain cash flow and position themselves competitively to attract and retain customers.
Consider the following actions to be ready for company success:
  • Strengthen company finances to be prepared for new opportunities and challenges. Consider adjusting pricing, trying new sales and marketing tactics, revamping your offerings and using technology to gain operational efficiency.
  • Take steps to build sufficient cash reserves. Successful businesses closely monitor cash flow, billing and expenses to enable quick action when it’s needed. And, they line up financing to cover shortfalls.
  • Check that you have the right financial and payment tools. Financial tools such as online and mobile banking, payroll and remote deposit build company efficiency. Offer multiple means of customer payment to attract and keep customers. 
  • Regard company technology as a competitive tool. Look for ways to continually invest in technology to boost company and employee efficiency.
METHODOLOGY

Citizen’s 2022 Business Outlook survey was conducted among 500 principals (owners, founders, CEO, presidents, partners, managing directors) of U.S.-based independent companies with less than $25M in annual revenue. The research was conducted via an online survey from January 19 to February 7, 2022, by SMB research agency Bredin.