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entrepreneurship it is a daily leap of faith. in times of economic uncertainty, that jump can feel like a plunge off a cliff. We are in one of those times. It is likely to take months to fully readjust to the forces that have battered the global 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 boost your business now and weather the economic cycles for years to come.
1. Learn the lessons of tougher times
A shaky economy presents a unique opportunity to make tough business plan decisions. Everything is open to a new examination. How has the market changed? Do your customers face challenges that create new opportunities for your solutions? How do the new conditions change your assumptions and what actions should you take in response?
Critically evaluate your product road map. Is this the time to change or become more aggressive with your current plans? Prioritize the highest margin features that can be achieved in the next twelve months. Delete the projects that are not on that list and reallocate resources accordingly. Re-evaluate prices. Even as inflation tiptoes back from the highest levels in forty years, the costs of raw materials and transportation remain very high. What will affect 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 what talent they could get. If there are employees or temporary or freelance workers those who would do better in a different job, now is the time to let them go. Make tough-minded fixes that will pay off overall, fixes that could be avoided in less challenging times.
two. Tighten your grip on cash
Venture capitalists are pulling out. In the third quarter, Crunchbase reported that funding for startups in the US and Canada fell 50% year over year. Valuations are down across the board. If you’re lucky enough to be a later-stage startup that benefited from VC generosity in 2021, make your latest surge last longer than anticipated.
Keep your dry powder dry and put off another round until the markets level off. Re-emphasize the basics for early-stage companies with less market validation and a greater distance between now and a potential exit. Delay all capital expenditures. If possible, take advantage of the hybrid work model to reduce rent and other office expenses. Continue with Zoom or Google Meet. Now is not the time to rack up travel expenses. Renegotiate rates and terms with service providers. Look up credit terms with key providers, in a word, boot.
3. Talk to customers, in person. Now.
How have the business needs of your customers, whether paid or beta, changed in the last 18 months? Are there benefits to your solution that have more recognized value now? Nearly every business, for example, from corporations to startups, has been forced to relearn the lessons of Supply chain management. Startups that can help their clients make better business decisions based on artificial intelligence (AI)Reducing costs by improving inventory management or protecting against out-of-stock scenarios by identifying and establishing relationships with new, more local sources of supply will have an advantage.
Related: Find validation in serving customers
Four. Non-dilutive capital
According to PitchBook, venture capitalists are showing increased interest in portfolio companies “whose satellite, robotics and software tools can do double duty” in the military and commercial markets. International conflicts are one of the reasons, of course.
Another is that the defense and military security industries are generally viewed as recession proof. Our firm routinely encourages portfolio companies to consider non-dilutive financing from the Small Business Administration: Grants to support cutting-edge 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 in many states there are resources to help. In addition to funding, technologists review and evaluate stern responses to agencies’ Requests for Proposals. At the very least, this can be excellent feedback and a great source of industry contacts.
5. Top-tier cultures attract top-tier talent
Company culture can be an asset or a liability. A rich and inclusive culture helps key hires say yes. Finding stakeholders who believe what you believe and are aligned with your team’s values significantly improves the odds that they will stick with you through good times or bad.
After months of “great resignation” fever, the superheated demand for talent may be cooling off. Maybe the deals aren’t as fast or as great as they were a year ago. Maybe Twitter isn’t the only high-tech business letting people go. In any case, the search for great talent is not a faucet that a young company closes and turns on. A startup can modulate the time or number of hires, but be ready to recruit and filter to fit the culture.
With the right mindset and intentional focus, an entrepreneur can make 2023 a year to strive and prosper. As Yogi Berra, my favorite baseball player of all time, said: “Swing at strikes.” In business, like baseball, the right swing can turn even the most challenging pitch into a hit.