From funding headwinds to economic uncertainty, some experts are anticipating 2023 will be a difficult year for business. The head of the International Monetary Fund (IMF) warned that a third of the global economy could be in recession this year. The “War for Talent” may continue to be difficult as businesses across industries try to identify gaps in vital skills, re-skill or upskill sections of their current workforce, or face the difficult decision to reduce headcount. To top it all off, some experts predict that inflation will remain high through the coming year.
So what can startups do to prepare for what unfolds in the macroeconomic landscape? According to organizational researchers, to achieve agility and resilience companies should commit themselves to focusing on stability. It provides the confidence, security, and optimism your team may need to act rationally and adapt quickly to disruptive change.
Your startup can preemptively prepare by taking simple steps to ensure your business has clear targets, guidelines and systems to help weather the potential ups and downs in 2023. Here are three tactics that may help improve your business’s stability.
Take stock of your product position
One stability-driving tactic can be leaning into your core product’s value proposition. Gaining market share with your startup’s core products or services may increase profits while eliminating the potential costs that come with researching and developing experimental initiatives. Many brands are based on good product reputation, so consider building on that reputation and prioritizing your current products during trying times.
Additionally, taking stock of your operating costs may help you shore up your fundamentals and achieve stability. Identifying opportunities to streamline costs – such as freezing new equipment purchases or negotiating opportunities to reduce office payments – can help.
Startup founders appreciate the dynamic world-class tech ecosystem [Seattle] offers. There are generous leaders in AI, Cloud IoT, Robotics, Big Data, FinTech, BioTech and more for you to connect with.
Like your product, another avenue to consider is your location. For example, it’s more than 50% less expensive to incorporate or start an LLC in Salt Lake City compared to most U.S. cities. Cities like Pittsburgh have historically low office space rents compared to the national average. On the flip side, remote work is a popular consideration for companies that reduces office space overhead and is a major recruiting tactic for potential talent. Smarter financial decisions around controllable factors in your business may help extend your financial runway in 2023.
Lean into your network
Your startup community can be valuable resource during economic uncertainty. Your startup’s investors, peers and mentors have valuable experience and may be able to bring new opportunities to the table to help in weathering a challenging economy.
Consider tapping into existing startup communities and local resources to provide ideas on how to reduce costs. Brett Greene, CEO of New Tech Northwest in Seattle, says “Startup founders appreciate the dynamic world-class tech ecosystem [Seattle] offers. There are generous leaders in AI, Cloud IoT, Robotics, Big Data, FinTech, BioTech and more for you to connect with.” Cities across the U.S. have resources tailored to the local entrepreneur communities that startups can lean on for support and opportunities — such as, Capital Factory in Austin, Texas, Silicon Slopes in Salt Lake City, and Startup Grind with chapters across the U.S.
Recreating the wheel can be costly. Your business may benefit from strategies built before. These communities and their knowledge base may prove invaluable for not just surviving but thriving through tough economic times.
Prioritize employees and culture
Despite recent layoffs in the tech sector, the job market remains relatively stable, making it common for employees to “job hop” if an opportunity presents itself. And losing top talent may slow your startup’s momentum.
Stay ahead of these challenges and help encourage your employees to stay by nurturing company culture. Show your employees that you put them first — especially during tough times — by prioritizing their development and well-being. For example, emphasize rewards that go beyond compensation, like a benefits package that not only provides the most appropriate medical coverage, but also promotes overall well-being.
Demonstrate your commitment to your employees’ growth as individuals by offering additional resources that help develop and nurture their career plan. Consider being proactive about communicating potential hurdles that may be in the pipeline but assure your workforce that they remain a priority.
Supporting your employees’ happiness, development and well-being may help foster loyalty so that your team is more likely to stay longer and perform well at your startup.
Preparing for 2023
2023 may bring economic hurdles to your startup’s doorstep. But that doesn’t mean you can’t be prepared for the potential challenges ahead. Consider building up cash reserves in case of an emergency and give your company the ability to cover unforeseen expenses without the stress of needing to find new financing or loans. Remember that your local startup communities have a wealth of knowledge and experience that you can tap into. And finally, continue to prioritize your employees, who are your greatest asset in the hard times and the good.
