Mentor Journey: Are you prepared for 2023?
Updated: 6 hours ago
We are almost done with 2022, and what a year it has been for startups. 2022 has offered us as a community the opportunity to understand that we need to stick together to survive what is to come. However, I feel that this opportunity hasn't been fully grasped. The world around us is changing a lot faster than we could have perceived. It is transforming into something completely new and different from everything we know. This can be both thrilling and daunting for anyone building a startup with limited resources within challenging conditions.
What can we learn from 2022?
In 2022, I witnessed many founders switch their startups' focus from growth to profitability. That switch cannot be easy! For years founders have been pressured to build growth at all costs ventures to blow up valuations. Now the same people are pressuring founders to go for profitability instead. Growth had become a dirty word by the same people who made it sexy!
And founders now must follow! They have to change operations, tactics, mindsets, team dynamics, and basically, the DNA of their startups to once again please investors. The same investors pushed them to continue with a high burning rate during COVID times (2020-2021) with promises of bridge rounds and further financing. Now, in 2022, they are asking them to find profitability to get additional funding.
In my humble opinion, this is messed up!
Building a startup infrastructure geared up for growth is entirely different from building the infrastructure for profitability, especially if the business model is not designed for high growth in the first place.
Furthermore, moving from cash burning-based high growth approach to profitability requires a severe shift from pushing "nice to have" products with promo codes to actually offering value to real-life "paying" customers! The very different context requires more than expected resources to achieve. And yes, it is an unpleasant situation that I believe was caused primarily because founders were pressured to choose investors' short-term well-being over the startup's long-term prosperity.
It is not growth over profitability. That is not and should not be a choice or even a debate.
It has always been about building startups with profitable growth!
The fact that we are discussing this shows the true impact of a superficial understanding of basic concepts on entrepreneurship.
When in doubt, don't use big words! Go back to basics. Design business models capable of delivering customer value in a profitable and scalable manner. There is no conflict between both. Such friction only happens when growth is forced on business models without the ability to do so.
So what will 2023 look like?
The Ecosystem Correction Year?
2023 is a year that promises significant correction in what we call the entrepreneurship ecosystem. It will be the year when finally, founders will reassume the position of power in the equation. Founders have discovered in the past few years that having investors as a support system isn't exactly the best way forward.
A startup will succeed because of the team, the customers, and the founders' ability to imagine a vision larger than the present. A startup is an investment opportunity offered only to the privileged few, not the other way around. My only hope is that more founders will realize this is the case.
A Year for Innovation?
2023 promises to be a rewarding year for agritech, insurance-tech, health-tech, and tourism-tech startups. However, the main focus of these startups should be on innovating relevant solutions for customers within the context of challenging economic conditions.
Customers will be looking for tools (products/services) to help them cope with the fast-changing world around them. The sooner you realize that, the better. Look here for inspiration on how to do that.
How can you prepare for 2023?
That is probably the question on your mind right now. How can I prepare for 2023 as a founder? How can I ensure that my startup will survive?
Well, no one can do that!
But there is plenty you can do to have the odds in your favor.
Reinvent your channels
In 2023, I believe everyone will be fighting over the control of the typical communication and distribution channels. This fight will render the typical ones expensive and overcrowded. Consider reaching your customers with low-budget guerilla marketing approaches. Be creative in how you deliver your message of value as well as in how you will provide your product and service.
For example, consider an alliance with local fast-food chains to deliver your promotions and products using their underutilized fleets. Build small inventory depots distributed strategically in cafes and restaurants around town with low traffic. They will appreciate the income, and you will get a cheaper alternative to warehousing and delivering your inventory. A win-win! look here for tools to help you achieve that!
Resize your value
In hard times, price becomes a sensitive matter. Take inspiration from the FMCGs companies. They keep the price point intact but reduce the size of their offering. Customers pay the same price and receive an unnoticeable reduction in the size of their offering. In a way, this creates a win-win situation for both the customers and the business. Find a way to adapt that approach to your product or service. Consider making a version of your product or service that can give your customer something good enough for the same price.
Reshape your value
Customers will be searching for something fresh and new in 2023. And who can blame them? Offer your value proposition in a surprising and entertaining way. Don't let it be about the sale but rather about the experience around that. Consider adding a gamification component to your product or service with achievements to unlock.
2023 is the year for founder humility. You are not a rockstar. You are a leader! And Leaders serve with value on their minds. Leaders create value and don't waste time bragging about it. Look here for inspiration on how to do that.
And most of all, please believe in every opportunity you have in front of you and understand that you are still in that game to win!
You are not the product of your circumstances. You are the result of your decisions! Move forward with better decisions!
You got this!
I know you are tiered but look at all you have accomplished so far! Look at where you are now!
You got this!
Goodwill & Respect 😊