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Entrepreneurship is a daily leap of faith. In times of economic uncertainty, that leap can feel like a cliff dive. We are in one of those times. It will likely take months to fully adjust to the forces that have plagued the global economy, and for business owners, months can feel like years.
With the right roadmap, entrepreneurs can survive and thrive in any economic scenario. Here are five things you can do to move your business forward now and through the challenges of business cycles in years to come.
Table of Contents
1. Learn the lessons of more challenging times
A rocky economy presents a unique opportunity to make tough business plan decisions. Everything is open to re-examination. How has the market changed? Do your customers face challenges that create new opportunities for your solutions? How do new circumstances change your assumptions and what actions should you take?
Critically evaluate your product roadmap. Is now the time to pivot or become more aggressive with your current plans? Prioritize the highest margin positions that are achievable in the next 12 months. Push out projects that don’t make that list and reallocate resources accordingly. Re-evaluate the prices. Even with inflation falling from its highest level in 40 years, raw material and transportation costs remain high. What are the consequences for your customers if you adjust prices or add surcharges to offset these costs, at least temporarily?
It’s been a tough year for hiring. Many companies took whatever talent they could get. If there are employees or gig workers who would do better in another job, now is the time to let them go. Make stubborn corrections that will generally pay off – corrections that may be avoidable in less challenging times.
Related: How to turn inflation and recession into your biggest business opportunity
2. Tighten your grip on cash
Venture capitalists are retreating. In the third quarter, Crunchbase reported that funding for startups in the US and Canada decreased by 50% year-on-year. Valuations have fallen across the board. If you’re lucky enough to be a late-stage startup that benefited from VC generosity in 2021, make sure your last raise lasts longer than intended.
Keep your dry powder dry and wait another round until the markets are even. Re-emphasize the basics for early-stage companies with less market validation and greater distance between now and a potential exit. Postpone all capital expenditures. If possible, take advantage of the hybrid working model to reduce rent and other office costs. Continue with Zoom or Google Meet. Now is not the time to charge travel expenses. Renegotiate fees and terms with service providers. Find credit terms with major suppliers, in short, bootstrap.
3. Talk to customers in person. Utilities.
How have your customers’ business needs, both paid and beta, changed over the past 18 months? Are there benefits to your solution that now have more recognized value? Almost every company, for example from corporates to startups, has been forced to relearn the lessons of supply chain management. Startups that can help their customers make better business decisions based on artificial intelligence (AI), reduce costs by improving inventory management, or protect against out-of-stock scenarios by identifying relationships with new, more local sources of supply and to build will have an edge .
Related: Finding validation in serving customers
4. Non-dilutive capital
According to PitchBook, venture capitalists are showing more interest in portfolio companies “whose satellite, robotics and software tools can do double dutyin military and commercial markets. International conflicts are, of course, one of the reasons.
Another is that the defense and military security industries are generally considered recession proof. Our company routinely encourages portfolio companies to consider non-dilutive financing from the Small Business Administration — grants to support advanced technologies range from $150,000 to more than $1 million.
Navigating the application process is not for the faint of heart. A startup needs to be realistic about the work involved, but many states have resources to help. In addition to funding, serious responses to agency requests for proposals are reviewed and evaluated by technologists. At the very least, this can be great feedback and a great source of industry contacts.
5. Blue-chip cultures attract blue-chip talent
Company culture can be an advantage or an obligation. An inclusive, rich culture helps key employees say yes. Finding stakeholders who believe what you believe and who align with your team’s values greatly increases the likelihood that they will stick with you, for better or for worse.
After months of “great resignation fever”, the overheated demand for talent could cool. Maybe offers aren’t as fast or big as they were a year ago. Maybe Twitter won’t be the only cutting-edge technology company letting people go. In any case, the search for great talent is not a faucet that turns a young company on and off. A startup can modulate the timing or number of hires, but is ready to recruit and filter for culture fit.
Related: 3 ways to stay competitive in the battle for talent
With the right mindset and purposeful approach, an businessroundups.org can make 2023 a year to strive and thrive. As Yogi Berra, my all-time favorite baseball player, said, “Swing at the strikes.” In business, like baseball, the right swing can turn even the most challenging pitch into a hit.
