Startup Sorrows: The Top 3 Challenges Coming in 2023 and What Your Startup Needs to Defeat Them

Startup Sorrows: The Top 3 Challenges Coming in 2023 and What Your Startup Needs to Defeat Them

Here are the 3 major #BossBattles your startup is going to face this year.

Being a startup founder has never been easy. But the pandemic years have been more difficult than ever, and the challenges aren’t over yet. 2023 is going to bring a perfect storm of obstacles to the startup scene, and these problems are threatening to cause the worst period for startups and early-stage venture-backed tech companies since the DotCom meltdown of the early 2000s.

You can’t change the macro forces that are gathering. But you can prepare your company for the oncoming storm. Here are the 3 major #BossBattles that are coming in 2023 – and how your startup can stay strong in the face of them.

Economic Uncertainty: Easy Money is Drying Up

The last several years have been a gravy train for startups. Capital has been easy to find, and revenue easy to generate. The economy has been in a growth phase since 2016, and while the COVID-19 pandemic took a giant-sized bite out of our GDP, the economic recovery has been fast and strong.?

But your startup’s days on Easy Street are numbered – and most startup founders in the game today have never seen the kinds of challenges that are on the way.

Runaway inflation is increasing input costs for startups, on everything from people to software. While some startups are finding ways to pass these costs on to clients, others are forced to eat the difference.

On top of high inflation, economic growth has stalled. Canada’s GDP grew by just 0.1% in October 2022 and stayed flat in November, which means a recession could be ahead. Capital investors are tightening their pursestrings, looking for safer bets in a crowded startup market. In other words: The days of easy access to capital are over.

But beyond deeper scrutiny from investors, the flagging economy spells trouble for startups in other ways. Businesses are looking for ways to trim their costs, spending less on everything from travel to marketing. One of the top expenses they’re cutting is vendor contracts. According to Fortune Magazine, “third-party contracts…are some of the first to see the door because they have relatively little impact on a company’s day-to-day operations.”

That means your potential clients don’t want to spend money on you – they’d rather spend money retaining talent and boosting profits. If your clients see you as a line item expense and not a profitable investment, they’re likely to kick you to the curb.

Going into 2023, you’ll want to ensure you have a concrete plan for consistently demonstrating value to clients and investors.?

This could mean creating new service offerings tailored to high-inflation, low-growth economic conditions.?

It could mean rephrasing the way you talk about your service offerings with clients to emphasize how you’re an asset in turbulent times.?

It’ll almost certainly mean reworking your investor pitch.?

However you do it, you’ll want to showcase your company as an indispensable value creator.

Global Disruption: Macroeconomic Forces Will Shape World Economies

Geopolitical instability may seem like a problem exclusively for politicians. But when stuff hits the fan, it creates a ripple effect that can have a wide array of consequences. And this effect can show up in surprising ways.

You may think the Russia-Ukraine war has nothing to do with your startup. But did you know that the Russian invasion of Ukraine is directly responsible for the semiconductor shortage?

One of the key compounds involved in creating semiconductors is neon. And 90% of semiconductor-grade neon comes from the Ukraine. In March 2022, after Russia invaded Ukraine, the world’s two largest neon suppliers halted their operations, deeming it too dangerous to continue business as usual during the war.

Semiconductors are used in everything from computers to medical devices to cars. Even if your company isn’t directly involved in hardware manufacturing, you still use servers and computers – and your vendors are likely feeling the chip shortage squeeze in the form of more expensive hardware and software as well.

Plus, food shortages, droughts, and inflation are driving up the cost of things like bread and coffee. So whether you’re treating your team with catering, going out to eat at local restaurants, or brown-bagging it every day, you and your team are still paying more money for the same food.

More COVID: The Pandemic and Its Fallout Aren’t Over

The COVID-19 pandemic just ended its deadliest year on record. According to the CBC, more Canadians died of Covid-19 in 2022, than in 2021 or 2020. While the vaccines have done an excellent job of reducing severe illness and death, the sheer number of cases means plenty of vulnerable people are still dying of COVID-19.

On top of deaths, though, long COVID is on the rise. As many as 1.4 million Canadians still have symptoms 3 months after recovering from an acute COVID infection. In many cases, these symptoms – like fatigue and brain fog – can be so severe that they prevent people from working. In the United States, long COVID is keeping as many as 4 million Americans out of the workforce.

It shouldn’t be hard to see why mass death and disability have a negative impact on startups. Many of the in-demand skills in the startup world – like UX design, programming, and business development – are difficult to come by, and if your startup’s ideal job candidates are sidelined by disability, that’s going to hamper your growth.

A sicker workforce also means higher absenteeism among the people who are working. More sick days means less productivity across all industries, which means more supply chain shortages. Startup founders will need to navigate a market constrained by illness and disability; that means learning to do more with less and learning to find efficiencies in creative ways.

Of course, navigating all of these #BossBattles on your own is a tall order. If you’re a startup founder who started your business after 2015, this is probably the first time you’ve had to face barbarians at the gates. That’s why having a strong team of advisors – an experienced and diverse board of business experts who’ve been there and done that – is invaluable.

The right board of advisors can draw from experience to guide you through the rockiest of storms, give you creative new ideas for solving problems, and help you stay focused on your goals when everything around you seems like a war-zone.?

You’ll also want to focus on staying creative during the downturn. Smart leaders find creative ways to thrive even in periods of economic uncertainty. That could mean leveraging government grants, or expanding into foreign markets, or retooling your offerings to be more recession-friendly.

The market and the world may look bleak at the moment. But startup success comes down to perspective and a willingness to understand and pursue your goals – regardless of external circumstances. And with a team of committed investors, active advisors, and well-connected board members, you can conquer any challenge.

What are you doing to prepare your startup for what’s coming? How are you building a more resilient business? And what challenges do you think will hit first?

#startups #success #entrepreneurship #bossbattles