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Entrepreneurship is a daily leap of faith. In times of economic uncertainty, this leap may seem like diving off a cliff. We are in one of those times. It will likely take months to fully readjust to the forces affecting the world economy, and for entrepreneurs, months can feel like years.
With the right playbook, entrepreneurs can survive and thrive in any economic scenario. Here are five things you can do to propel your business forward now and through business cycles for years to come.
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 reconsideration. How has the market changed? Are your customers facing challenges that create new opportunities for your solutions? How does the new situation change your assumptions and what actions should you take in response?
Critically evaluate your product roadmap. Is now the time to get more aggressive with your current plans or make changes? Prioritize the highest margin features that are achievable in the next twelve months. Pull out projects that don’t fit into that list and reallocate resources accordingly. Price Reassessment Even with inflation returning to its highest level in forty years, raw material and transportation costs remain high. How will it affect your customers if you adjust pricing or add additional fees to offset these costs, at least temporarily?
It was a difficult year for recruitment. Many companies took what talent they could get. If there are employees or workers who would do better in another job, now is the time to let them go. Make tough reforms that generally pay off—reforms that might be avoidable in less challenging times.
Related: How to turn inflation and recession into your biggest business opportunity?
2. Secure the cash
Venture capitalists are pulling back. In the third quarter, Crunchbase reported that funding for startups in the US and Canada was down 50% year-over-year. Valuations are down across the board. If you’re lucky enough to be a late-stage startup with a big VC in 2021, your last raise will last longer than you think.
Keep your dry powder dry and postpone it for another round until the markets even out. Re-emphasize the fundamentals of early-stage companies with less market credibility and more distance between now and possible exit. Delay all capital expenditures. If possible, use a hybrid work model to reduce rent and other office costs. Continue with Zoom or Google Meet. Now is not the time to increase travel expenses. Re-negotiate fees and terms with service providers. Look for credit terms with key suppliers, in a word, bootstrap.
3. Talk to customers in person. now.
In the past 18 months, how have the business needs of your customers—whether paid or beta—changed? Does your solution have benefits that are currently worth more? Almost every business, from corporations to startups, has had 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 and building relationships with new, more local supply sources will have an advantage. . .
Related: Finding credibility in providing customer service
4. Non-dilutive capital
According to PitchBook, venture capitalists are showing more interest in portfolio companies “whose satellites, robotics and software tools can do double duty in the military and commercial markets.” Of course, international conflicts are one of the reasons.
Another thing is that defense and military security industries are generally anti-recession. Our firm routinely encourages portfolio companies to consider non-reduction funding from the Small Business Administration – grants ranging from $150,000 to more than $1 million to support advanced technologies.
Navigating the application process is not for the faint of heart. A startup needs to be realistic about the work involved, but there are resources in many states to help. In addition to funding, serious responses to agency requests for proposals are reviewed and evaluated by technologists. At the very least, it can be great feedback and a great resource for industry contacts.
5. Blue chip cultures attract Balochi talent
Company culture can be an asset or a liability. A rich and inclusive culture helps key recruiters say yes. Finding stakeholders who believe what you believe and who align with your team’s values will significantly increase the likelihood that they will stick with you through good times and bad.
After months of “big layoff” fever, the glut for talent may be abating. Maybe the offers aren’t as fast or big as they were a year ago. Twitter may not be the only high-tech business to let people go. Regardless, finding great talent isn’t a milkshake for a young company. A startup may moderate the timing or number of hires, but is open to hiring and filtering for culture fit.
Related: 3 ways to stay competitive in the war for talent
An entrepreneur with the right mindset and deliberate approach can make 2023 a year of effort and progress. As Yogi Berra, my favorite baseball player of all time, said, “Swing at strikes.” In business, as in baseball, the right swing can turn even the most challenging pitch into a hit.