How Startups Can Sustain Success & Growth During a Recession
By Chessy West
With 50 million new startups launching every year, the competition to succeed — and then show sustained value — is fierce. It's no secret that IPO activity dropped dramatically in 2022 — largely in part, due to rising inflation concerns and the looming recession.
However, there is a laser focus on startups to prove ROI in 2023 that many would argue is incredibly accelerated and feeling unprecedented. So, how can a startup today stand out from the pack? Hint: it starts with keeping the customer in purview.
Here are three tips on how startups and business owners can look to efficiently sustain long-term growth, demonstrate value, and drive organic growth through smart product and service creations.
Don't Compromise Customer Service
Within the last three years, customer service has become more important than ever as customers leaned heavily on organizations for support throughout the pandemic's peaks and valleys. Those expectations will only become heightened in 2023 and it would be wise for any startup to keep their eye on service, as a growth driver, to deliver the support their customers need.
In fact, a July 2022 State of Customer Care survey from McKinsey found that customer care is now a strategic focus for companies, where respondents reported one of their top three priorities going into 2023 would be driving a simplified customer experience.
How would one do that? Invest in people, operations, and sustainable technology. Look at automation tools and back-office systems, and your incoming and reserved cash flow to determine whether hiring customer care talent is possible.
Remember, the service customers receive affects their perception of your startup and business. This will always be an area where companies can drive loyalty through a more personalized customer journey and unlock greater productivity, increase revenue, and improve real-time customer insights.
Offer Personalized Products and Experiences
Personalization has become one of the most indispensable strategies any startup and business owner can implement for long-term growth and success. If we look back to 2018, an Epsilon research report found that 80 percent of consumers were more likely to make a purchase when offered personalized experiences. What's even more interesting about that statistic, a 2022 Statista survey showed over 60 percent of consumers said businesses who delivered non personalized content would lose their loyalty.
Developing a strong and strategic personalization journey starts with understanding your customer. Who are they? What are their purchase behavior patterns? What kind of personalized product offerings and recommendations will your startup and business have? These are all questions that need to be thought through, because when executed effectively, certain strategic personalization initiatives can help boost your profit margins.
Prove Your Value
Navigating a recession as a startup is particularly challenging. According to a January report, investments in North American startups fell 63 percent within the last quarter of 2022 compared to the same period a year earlier. If your startup hasn't become profitable enough to stand on its own yet and the investor well is coming up dry, there is time to course correct. For startups to prove, retain, and grow value during a recession, lean into the "it's not a sprint but marathon" mentality and start leveraging what makes you unique from the competition.
You can start this process by re-examining your original business plan and adjusting it to reflect current market conditions. Additionally, think outside of the box and explore new opportunities, such as identifying and improving successful aspects of your business, expanding into new markets or removing certain elements of your business that aren't yielding sustainable returns.
Amid hurtling through economic forecasts and uncertainty, it's also important to reset and find your cadence for amplified success. Granted, the startup market is now softer than in previous years. However, you can come out of this from the other side and still catch your wins.
The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.
Chessy West is CFO at Kevel.