Examining new business opportunities in the new year

Published on February 17, 2022 | Webster Bank

Continued economic growth and recovery bodes well for the regionÕs businesses. Although not as robust as 2021, economic activity is forecasted to remain positive this year.

Already, data and statistics compiled for Q3 2021 give businesses several reasons to be optimistic going forward.

In Connecticut: The Department of Labor reports:

• The unemployment rate continues to drop and is now at 6.0 percent.
• The state has regained 75.3 percent of the jobs lost during the 2020 lockdown.
• Most industry sectors are growing and offering new and better jobs for workers.

In Rhode Island:

• The Providence Journal reports the state should approach full employment by year end.
• The U.S. Bureau of Economic Analysis says real GDP grew at an annual rate 2.2 percent in Q3, landing it in the top 20 for all U.S. states.

Against this backdrop, what does this mean for business leaders throughout the region? What new opportunities will 2022 offer? And what adjustments will be required to make the most of them and get positioned to maximize them?

Here are a few observations that can help put 2021 in perspective along with some action steps that can help you plan for a crop of new opportunities in 2022.

1. Look for ways to adapt and change.

With liquidity still available in the market, well-managed companies can continue to seize growth opportunities through additional mergers and acquisitions in 2022.

Strong companies that continue to optimize processes, find efficiencies, and innovate operations are getting great valuations. And many family-owned businesses, which had succession plans stymied due to COVID, are now poised to proceed and change hands from their retirement-ready owners to their next-gen principals.

The quest to become greener is also contributing to continued acquisition activity. Well-capitalized organizations that are focused on this goal are likely to target firms for possible acquisition that already have sustainability practices in place to help evolve and complement their own businesses.

2. Consider tech solutions to gain more efficiency.

Digital payments

Even before the pandemic, the adoption of real-time or instant payments was already on the rise. But during 2021, the trend accelerated.

Looking ahead, companies that continue to adopt contactless apps and other digital technologies will benefit from streamlined payment processes, the ability to predict income and expenses with more certainty, and optimize their cash flow. Given these benefits, companies are likely to find ways to leverage payment technology to further improve processes and operate more efficiently.

Online banking

Businesses of all sizes are increasing demand for the online banking solutions. To simplify cash management and liquidity, many will continue to seek services and solutions, such as:

• Digital website/ecommerce platforms Ð that are built for billing/collecting cash for products and services.
• Mobile business solutions Ð so you can conduct banking (and business) from anywhere to keep operations going.
• Business bill pay Ð to provide more control and convenience over payables.

3. Assess capital and cash flow needs.

If your business operates in a sector that continues to be severely impacted by COVID restrictions, you may need flexibility to defer payments on loans, rents, mortgages and other obligations or help optimizing cash flow to get financial relief.

Since many lenders, including Webster Bank, realize the situation is not permanent, they may defer some, or all, of your payments. Tacking payments onto the backend of loans can provide more of a runway to help businesses get through the pandemic.

Other businesses are seizing new opportunities to expand and grow as a result of situations brought on by the pandemic. For instance, a metal fabricator realized the need to produce fine metal screens to cover openings people talk through at facilities like the Department of Motor Vehicles or other municipal buildings. They needed capital financing to retool and ramp up production as quickly as possible to fill orders and help re-establish in-person operations to meet demand.

4. Continue to deal with volatile demand for products and services and labor shortages.

Businesses may still need to deal with slow, staggered demand from key market segments, making it difficult to anticipate volumes and maintain the right level of raw materials or finished goods. Securing supply chain redundancies can provide extra capacity and inventory while offering better jobs and higher compensation can help entice more workers back to the workplace and fill more openings.

5. Remain vigilant about fraud protection.

Businesses are now more concerned than ever about fraud and cybercrime. ThatÕs not surprising given the escalating cost associated with the damages they cause.

• This year, cyberattacks, in particular, will result in about $6 trillion in damage.
• A single data breach will cause $13 million worth of damage.

As you continue to use remote work environments, become more proactive and vigilant about monitoring and implementing better controls and services that will thwart hackers attempts to steal your data and money.

Fraud protection solutions that can help maximize cash flow as well as security will be key, including:

• Check Positive Pay to protect commercial checking accounts against security breaches of potential check and ACH fraud.
• ACH Positive Pay to guard against unauthorized and potentially fraudulent ACH debit entries and restricts access to funds/accounts.
• Two-Factor Authentication to add an extra layer of security to verify users and passwords to access your accounts and systems.
• Remote Deposit Capture to scan checks and deposit them even when not working from the office.
• ACH Services to push/pull payments electronically without having to receive or issue actual checks.

How can you become better positioned for opportunities in 2022?

You must be intellectually honest about the current state of your business, level of demand, and your financial and business resources. Among the steps you can take now:

• Talk to peers who donÕt compete in the same geography/markets to see what they are doing and share best practices.
• Leverage technology to gain more efficiency, particularly to replicate the energy and engagement thatÕs created from in-person settings.
• Explore available business resources and services such as Economic Development Companies and non-profit organizations with retired executives who can provide free consulting. There are also state and local agencies who have small direct lending programs which together can help guide and capitalize small businesses.
• Keep in contact with your banker and other business advisors to see what services and expertise they can offer in terms of cash management, financing, lending, fraud protection and cybersecurity.

WeÕre not completely back to normal yet. But you can make the most of new opportunities by exercising sound business practices and staying informed.

General Disclosures

The opinions and views in this blog post are those of the authors, and are not intended to provide specific advice or recommendations for any individual. Please consult professional advisors with regard to your individual situation.