By Matt Bunn, Co-founder at Capita Scaling Partner
It is fair to say that the current economic situation presents a dull outlook. With consequences on business investment and client budgets, it’s a challenging time for tech firms to remain optimistic in their quest to achieve their business growth ambitions. Yet despite the current challenges, it’s vital to recognise the role that business can play in rejuvenating the economy. Building a business through turbulent times is far from unachievable.
Customers and companies alike are searching now more than ever for innovative solutions to their problems. This presents an opportunity for new businesses to burst onto the scene and win their first big contract client, accelerating growth in the process.
Creating a compelling business case
On the surface, now can seem like a risky time to double down and strive for business growth. However, with adversity comes opportunity. Previous financial crises have led to the incorporation of the tech giants of today, with WhatsApp, AirBnb, and Uber all stemming from the 2008 financial crisis.
Success leaves clues.
The common denominator with these companies was their ability to offer value to consumers, facilitating their daily lives through saving time, money, simpler communication and beyond.
By focussing on essential business benefits and ensuring activity is aligned with profitability and sustainability, these firms were able to overcome adversity and set themselves up for long-term success. And there are lessons to be learnt from that.
It may be necessary to pivot the way a business is positioned if the market is facing a particularly harsh downturn. If that’s the case, consider how you could adapt your services to better meet the needs of the existing market or to sell into a more thriving market altogether.
Again, drawing upon an example of this being done effectively – the Netflix that we know and love today started out selling postal DVDs but transitioned to accommodate the behaviours of its target audience.
Albeit for different reasons, the concept remains valid.
The amount of disposable income available for consumers across the nation is being severely hampered by rising energy prices and food bills. We don’t know when we’ll be back to ‘normal’ or ‘affordable’ levels, so buyers are largely adopting a cautious approach to spending. Naturally, this makes it more difficult to get customers to part with their cash.
This is exactly the challenges that are facing businesses of all sizes at the moment, and it extends beyond those in consumer-facing industries. Firms operating in business-to-business environments are facing similar challenges as companies look for new ways to cut costs to survive the current downturn. It’s well accepted that suppliers are normally the first victims of any cost-cutting procedures, and this is in many ways understandable given that making staff redundant is often the alternative.
An uncertain sales environment often means investors will be looking to avoid risky commitments, instead opting to wait for the storm to pass before making any new investments. As a result, it’s a challenging time for sourcing new capital to support business growth. It’s a time to explore other avenues of support.
The power of partnerships
The conversation around economic uncertainty and the impact that it is having on business tends to be centred around funding. However, it is important to consider the other avenues of support that are available to help overcome financial restraints and hamstrung budgets.
For example, consider the power that network connections and sales introductions can bring. We believe in the synergy between innovative tech startups and established corporates, who are constantly looking for new solutions that can help them to build differentiated offerings for their clients.
There is somewhat of a misconception that large corporates, and public sector companies overlook the smaller players in favour of more well-established providers. The reality is that in many cases, they are simply unable to transact with startups and scaleups because they don’t speak the language as smaller firms may not comply with certification requirements and existing due diligence processes to be able to win major contracts in their early years. This is where the experience of people who have been there and done it before can be invaluable to your business.
By perceiving capital as the sole dictator of business success, you are likely to miss alternative factors and the wealth of support vectors that are available to help accelerate business growth.
Thriving business drives a strong economy
A strong economy requires strong business growth.
Starting out with a core team of founders and directors, a thriving business will naturally need to build a team to support its growth by introducing different arms of the organisation such as dedicated teams for sales, marketing, and human resources. This helps to create opportunities in the job market.
In addition, startups that see the most success tend to stem from disruptive innovations which combat problems that exist in society. Whether it be new ways to save time, cut costs, or address a whole other pain point altogether, an ecosystem of successful scale-up businesses brings with it a multitude of new solutions and ideas. Innovation is an essential driver of economic growth by driving greater productivity and therefore overall output with more goods and services being able to be produced as a result.
Whilst now isn’t the easiest time to build and grow a business, the challenges presented by the economic situation do not make failure inevitable. Focus on providing value to your customers and access the support that’s available and anything is possible.