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Entrepreneurship is a daily leap of faith. In times of economic uncertainty, that leap can feel like jumping off a cliff. We are in one of those times. Fully readjusting to the forces that have hammered the world economy can take months, and for entrepreneurs, months can feel like years.
With the right playbook, entrepreneurs can survive and thrive in any economic situation. Here are five things you can do now to move your business forward and weather the business cycle for years to come.
1. Lessons from more challenging times
A volatile economy provides a unique opportunity to make tough decisions about business plans. Everything can be re-examined. How has the market changed? Are your customers challenged to create new opportunities for your solutions? How does the new situation change your assumptions, and what actions do you need to take to deal with it?
Critically evaluate your product roadmap. Is it time to adjust your current plans or become more proactive? Prioritize the highest-margin features achievable within the next 12 months. Projects that are not on that list are pushed out and resources are reallocated accordingly. Re-evaluate pricing. Raw material and transportation costs will rise even as inflation falls from its highest level in four decades. What would be the impact on your customers if you adjusted your pricing or added surcharges to offset these costs, at least temporarily?
It’s been a tough year for recruiting. Many companies take advantage of the talent they can get. If there are employees or gig workers who are doing better at different jobs, now is the time to let them go. Make hard corrections that pay off overall—corrections that might be avoidable in less challenging times.
related: How to Turn Inflation and Recession into Your Greatest Business Opportunity
2. tighten cash
Venture capitalists are retreating. In the third quarter, Crunchbase reported that funding for startups in the U.S. and Canada was down 50% year-over-year. Valuations fell across the board. If you’re lucky enough to be a late-stage startup benefiting from VC largesse in 2021, let your last raise last longer than expected.
Keep your dry powder dry and hold off on another round until the market balances out. Re-emphasize the fundamentals of early-stage companies with less market validation and a longer distance between now and a potential exit. Defer all capital expenditures. Take advantage of hybrid work models where possible to reduce rent and other office expenses. Continue to use Zoom or Google Meet. Now is not the time to increase travel expenses. Renegotiate fees and terms with service provider. Seek credit terms with key suppliers, in short, bootstrap.
3. Talk to customers in person. Now.
How have your customers’ business needs (whether paid or beta) changed in the past 18 months? Are there advantages to your solution that now have more recognized value? For example, almost all businesses, from corporates to start-ups, have been forced to relearn the lessons of supply chain management. Startups that can help customers make better business decisions based on artificial intelligence (AI), reduce costs through improved inventory management, or prevent stock-outs by identifying and building relationships with new, more local sources of supply will have Advantage.
related: Look for validation in service clients
4. non-diluted capital
According to PitchBook, venture capitalists are showing greater interest in portfolio companies whose satellites, robotics and software tools can serve dual purposes in military and commercial markets. Of course, international conflict is one reason.
Another reason is that the defense and military security industry is generally considered recession-resistant. Our firm often encourages portfolio companies to consider non-dilutive funding from the Small Business Administration—grants ranging from $150,000 to over $1 million to support cutting-edge technology.
Navigating the application process is not for the faint of heart. Startups have to be realistic about the work involved, but in many states, there are resources to help. In addition to funding, critical responses to institutional requests for proposals are reviewed and evaluated by technical staff. At the very least, this can be a great source of excellent feedback and industry connections.
5. Blue-chip culture attracts blue-chip talents
Corporate culture can be an asset or a liability. An inclusive, rich culture helps key employees say yes. Finding stakeholders who believe in your beliefs and align with your team’s values can dramatically increase the odds that they will align with you in good times and bad.
After several months of “big resignation” upsurge, the overheated talent demand may cool down. Maybe the offers aren’t as fast or as grand as they were a year ago. Maybe Twitter won’t be the only advanced technology company turning people off. Regardless, finding great talent isn’t a faucet that a young company can turn off and on. A startup may adjust hiring timing or headcount, but be prepared to hire and screen for cultural fit at all times.
related: 3 Ways to Stay Competitive in the War for Talent
With the right mindset and a conscious approach, entrepreneurs can make 2023 a year to strive and thrive. As my all-time favorite baseball player, Yogi Berra, said, “Swing when you hit.” In business, just like in baseball, the right swing can transform even the most challenging pitches. hit.