The consensus is that we are in for a tough economic time. Whether it’s because of the cost-of-living crisis, inflation and interest rates, or the impact of the climate crisis, the economic outlook is pessimistic. B2B PR agency CommsCo recently surveyed tech leaders and found that 37% believed the economic climate was the biggest threat faced by their business. Even more, 77%, expected the recession to affect tech sector investment. But do we need to be so pessimistic?
Those who have lived through previous recessions, and the UK has seen at least one every decade since the Second World War, will know that many businesses not only survive but thrive during a recession. A bad economic climate does not have to be an impossible business climate, in fact, I’ve found that it often presents an opportunity.
The importance of confidence
As shown in our survey, confidence drops during a recession. And when confidence drops, so do spending and investment. Your job, therefore, is to ensure that confidence in you remains high.
You invented your product or created your service because there was a need for it: that need will not have gone away. You need to get your story out, convincing people that, whatever the wider economic weaknesses, your business case remains strong.
Much of that means acting in exactly the same way as you normally would. Ensure that you have a strong network, and take opportunities to build relationships. Make sure you are connected to the relevant tech and accelerator hubs. Use these to gain knowledge and connections, find out how others have raised funding, and what funders might be looking for.
It will, of course, be harder to succeed. It’s a challenging VC landscape, and investors will be careful about how they invest. But use your networks wisely, allow them to grow organically, and think carefully about when you look for funding, then you can maximise your chances of success.
Developing your business
Our survey found that many businesses were looking at traditional ways to help weather the storm. Increasing the cost of services was planned by 49% of respondents, while a similar number, 47%, were reducing marketing spend. But I don’t believe that such belt-tightening is the best approach.
When overall spending is reducing, increasing prices and reducing marketing only make it less likely that you will get a share of that spending. Increasing prices when many will be looking at how to reduce their costs puts you at an immediate disadvantage. And reducing your marketing will only reduce your brand recognition. Out of sight is out of mind, and a recession is the worst possible time to be out of mind. Savings may be possible — many are starting to understand that there is such a thing as lean marketing — but they should never be at the cost of your business.
How should you act?
Tougher times mean tougher scrutiny from investors. They will be looking to see how businesses perform in times of adversity; after all, a good investment during a recession will be a great investment when the economy is in better health. Recession or not, you should always manage your costs. Remote working is a huge win in this area, but ensure you invest in team-building.
Again, it comes to need. Two-fifths of startups fail because there is a lack of market need. Ensure that you have a strong story that articulates the need, how this translates to demand, and how you plan to turn that demand into a profit or value. With a compelling roadmap, the value of investment should become clear.
Use that roadmap to differentiate. Show how you are different and what makes you unique, how you meet a need that no one else does, or in a way that no one else does. Tell your story. It will ensure that you stand out when investors are considering their options.
And, above all, be consistent. You need to shine when you are seeking funding, but you should always shine. Follow news events, making sure you understand the market and adapt accordingly. Make sure you tailor your story appropriately, communicating it regularly. And do it to build a long-term brand that customers love.
When you have that all in place, getting the investment you need becomes much easier because confidence in the market becomes secondary to the confidence an investor will have in you.
This is a guest post by Ilona Hitel, the MD, and founder of The CommsCo, an integrated B2B tech PR agency with a niche for working with rapidly growing, disruptive technology brands.
This article is part of a partnership with The CommsCo.
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