Hello Alice CEO Carolyn Rodz On 2024’s Biggest Challenges for Small Businesses (Full Q&A)

Nobody expected it, but the economy is looking up. The S&P 500 set an all-time high and the Fed seems to have tamed inflation without inducing a recession — the “soft landing” that once seemed too good to be true.

But small and medium businesses still have challenges ahead in the new year. According to a survey of SMB owners from fintech platform Hello Alice, the biggest is raising capital; half say they don’t have enough funding and a quarter lack access to credit. Hello Alice CEO Carolyn Rodz shared her takeaways with b., along with business advice for kicking off 2024.

b.: What can business owners do to address their financial challenges this year?

Rodz: Businesses that are financially healthy open up opportunities … opening doors to capital, to expanded networks, to new customers and contract opportunities. But the reality is that over 50% of small businesses are financially unhealthy…

As we look at this data, our focus has been on assisting businesses in establishing a solid foundation for financial health. This involves various elements, such as ensuring accurate financial statements, tracking and understanding cash flow, and enhancing operational efficiencies. Ultimately, these pieces set up companies for success and facilitate access to capital. And as you have more capital, you’re able to market more and fund growth opportunities for the business. They’re very interconnected.

And capital comes in two forms. The first is organic revenue growth, which is the most sustainable and ideal form of capital for a business. Achieving this involves attracting more customers and generating revenue by appropriately pricing products and maintaining good margins. The second is external capital — whether it’s a bank loan, venture capital, crowdfunding, etc. — which may be needed to fuel some of that growth, depending on the business model, growth stage, current business needs, and market conditions.

b.: What are some New Year’s resolutions that individuals and organizations can adopt to better support small businesses?

Rodz: The easiest solution is to shop small. Every purchase makes a big difference, and it’s driving that core revenue growth. Beyond that, I always tell people: Everybody has expertise that can help a small business. Offering mentorship, guidance, and connecting businesses to resources can be immensely valuable. So is promoting companies by sharing recommendations online or through word of mouth. All of that helps push the ecosystem forward.

I think people often don’t realize that supporting small businesses not only benefits the businesses, but also the community at large. The more that small businesses grow, the more jobs they create, the more the community thrives, and the more support from local government, which contributes to things like good schools, community resources, and infrastructure. Small businesses sit at the core of so many pieces of our lives and impact every single one of us, directly and indirectly. Taking the extra time and effort to mentor, spend money with, and promote small businesses has a great impact on our overall quality of life.

b.: As far as mentorship, how might someone offer their skills to a small business?

Rodz: Consider your skills — whether in accounting, law, medicine, another field — and identify businesses that can benefit from your expertise. For example, a doctor might collaborate with healthcare companies, accountants can assist any business with financial needs, and similarly, lawyers can provide legal support to most businesses. Recognize your strengths, which could include marketing, communications, or even networking, and offer them to businesses in need.

Feel free to reach out via email at info@helloalice.com if you’re interested in sharing skills or mentoring. Alternatively, ask around within your own community. Small business owners are incredibly well-networked among each other. Find a local business and ask, “I’m looking to provide legal support. Do you know of any businesses that might be interested?” They probably know somebody.

Another avenue is to get involved with local startup communities, which you can find in most major cities. In smaller towns, you can find local or regional SBA offices and chambers of commerce that can help make those connections.

b.: What advice do you have for someone planning to start their own small business for the first time this year?

Rodz: Operate conservatively. People often underestimate the time it takes for sales and product development. Be conservative in your estimates and layer in contingencies — essentially, plan for the worst and hope for the best.

Starting a business often requires at least 150% more time, effort, and capital than initially anticipated. Particularly in this economy, where obtaining bank loans or venture capital is challenging, it’s important to be conservative with your funds and bootstrap that early growth as much as you can.

b.: Your data reflects an optimistic outlook — for example, small business annual revenues have increased since 2021. What other reasons do we have to be hopeful this year?

Rodz: Business owners are optimistic and risk-tolerant by nature — you have to be, given the nature of venturing into the unknown. And post-pandemic, I think we’re seeing notably increased support for small business owners.

More technology is available than before. Companies that traditionally catered to larger enterprises have extended their services downstream to small and micro-sized businesses. Tools like artificial intelligence, including chatbots, increase the output capabilities of small business owners. You essentially have a copywriter or graphic designer in your back pocket.

Between the access to technology and the knowledge-share of a well-connected small business ecosystem, there’s a lot of opportunity. That also means it’s going to be more competitive — we’re seeing more businesses launch than before — but again, with that scale comes support. Banks are refocusing services on small businesses, and large corporations are viewing small businesses as an increasingly viable market due to that growth.

A timely topic right now, looking at the growth of small business, is that the majority of new businesses are started by women and people of color. … Many resources were emerging during and post-pandemic, and are now under threat due to political debate. As we’re seeing a lot of the diversity and inclusion efforts come under fire … it’s important to think about how we can bring the ecosystem together and build the right programs to bridge a path to equitable opportunity. We’re working on this with governments, corporations, and nonprofits to keep these paths open — whether it’s grant programs, enterprise resources, innovation programs — ensuring that every business owner in the United States has an opportunity to pursue a good idea.

This article first appeared in the b. Newsletter. Subscribe now!