In 2023, we'll see a number of different trends that are going to affect startups. These include customer demand volatility, talent scarcity, regulatory uncertainty, and funding challenges. For example, the supply chain management industry is projected to grow at 3% over the next five years compared to 8% in 2018. This means fewer startups will survive in 2023 than before.
What can you do as an entrepreneur if this happens? Learn about what you can expect this year so you can prepare and identify strategies to stay afloat and thrive.
CEOs need to be prepared for the challenges that await them in 2023.
The world of venture capital (VC) has changed dramatically over the past decade. In particular, it's important for startup CEOs to recognize that VCs will still be interested in startups—but they'll have to be smarter about how they value and operate them. Here are four of the biggest problems that companies on the rise will face this year:
- Customer demand volatility.
In 2023, customers will be less loyal and fickler because of the sheer amount of offer available to them, but also because inflation and economic constraints will push them to become pickier about their choices as a consumer. Companies that can't adapt to this new reality and take their client bases for granted will struggle to survive in the new economy.
- Lack of funding.
It’s no secret that there are fewer VCs than there used to be, and now they're more cautious than ever. With the looming recession, you can expect them to be even more selective than usual. In 2020, there were nearly 300 new companies founded every day in America alone. That number has declined by over 50% since then and is expected to continue declining into 2023 due to a shortage of funding for startups, since fewer investors are willing to put money into risky ventures during economically-unstable time periods like this.
If you're planning on raising money in 2023, it's important that you know your target market and have a solid business plan in place before approaching the bigwigs.
- Talent scarcity.
In 2023, the US will continue to face a talent scarcity problem. As the economy continues to heat up, more and more companies are vying for the same talent pool. The tight labor market makes it harder than ever for companies—let alone startups—to compete in their talent hunts.
Furthermore, startup CEOs will have an even harder time recruiting developers in particular: The tech industry continues to grow at a rapid pace and there are currently hundreds of thousands of unfilled jobs in development roles across America.
For this very reason, more and more startups continue to look at outsourcing as their go-to strategy to jump talent-related growth hurdles, and for those who want to keep things close and personal, nearshoring is a good, high quality alternative to traditional offshoring.
- Regulatory uncertainty
Regulatory uncertainty will be an increasingly common challenge for startup CEOs. Today, regulatory agencies are prioritizing enforcement actions that impact large banks and financial services companies. However, as the industry becomes more regulated and closely scrutinized by regulators, they may focus their efforts on small business owners in the future.
Regulators may take action against startups due to their tendency to innovate in areas where traditional laws don't apply or haven't been updated yet. In addition, startups are often perceived as less stable than established businesses—this perception can make them seem like easy targets for regulators trying to demonstrate they're doing their job responsibly.
Staying alive in 2023 will be a commitment to staying on top of the changing times.
The challenges and opportunities you'll face as a CEO in 2023 are going to be different from those of today. That’s why it’s vital that you're prepared for the future, by staying on top of trends and thinking ahead.
The future looks bright for startups, but it requires the right mindset, skills and resources. If you’re a CEO looking to take your business into 2023, then we hope this article has given you some insight into what lies ahead.
