Bure Valley Group is an investment introducer platform which links successful investors with exciting, innovative UK startups seeking funding. This content is for information purposes only and should not be taken as financial or investment advice.
The UK has come through a difficult year in 2023. Rising interest rates, higher inflation and global instability are just a handful of the challenges affecting households. Looking ahead, everyone – including startups – hopes for better news in 2024. Yet economic uncertainty still remains. How can founders and investors continue to pursue their growth goals in this context?
Below, our investment team at Bure Valley Group offer some thoughts on how startups can continue thriving in uncertain times. We hope these insights are useful. To learn more about our EIS projects and other early-stage opportunities, visit our portfolio page here. For enquiries regarding our latest projects and funding, you can reach us via:
+44 160 334 0827
Building resilience beyond finances
As young businesses, startups naturally face a disadvantage to large corporations when it comes to their “rainy day fund”. Funds are, naturally, ploughed heavily into growing the business; hiring new staff, developing products and marketing to target audiences.
This can leave many small businesses vulnerable when the economy is struggling. If customers reduce spending due to rising unemployment, for instance, then startup sales may be inhibited – strangling some in the crib.
Fortunately, startups do have many advantages in such situations. Think of it like sea vessels. A larger boat may have a deeper draft, or bow, to weather heavy storms. Yet larger ships are harder to control and can be thrown against hidden rocks. A small yacht built for the ocean, by contrast, is far more manoeuvrable. The same holds true for many startups.
For instance, building operational resilience can be easier in an early-stage company since access to additional capital is less necessary. Startups are often more willing to adopt new technologies and innovation to give them an edge over cumbersome, larger players with outdated processes and systems.
Diverse revenue streams
Startups often face a difficult choice between focusing resources on one product (or product range), on the one hand, and diversifying their revenue streams on the other. After all, spreading yourself too thin across many products and markets risks diluting startup resources, making it difficult to become a competitive player in a single one of them.
However, focusing too much on one product/market could leave the business vulnerable to a significant change. Perhaps a new regulation comes into force which strangles the product’s viability. Or, customer tastes could suddenly change due to looming inflation or a dramatic advancement in technology (e.g. generative AI).
Here, a startup needs strategic thinking from its founder(s) and investors. Maybe the business could begin with a “market penetration” approach, moving swiftly to a “market development” strategy after a few years – adding one or two more segments to its target audiences. Bringing in new complementary products or services can also provide a helpful financial buffer.
Invest in people
Having a capable, loyal and motivated team is vital to a startup’s success – especially in difficult economic times. It can be a challenge for founders to keep staff wellbeing near the top of the priority list when the business is buffeted.
Yet doing so helps team members to recognise that they are valued within the organisation – making it more likely that they will stay and go the “extra mile” to help make the business successful. Ideas here include providing minimal annual leave, industry tips, staff training, mental health support channels (e.g. a counselling service) and mental health first aiders.
Build intelligence capabilities
How can you successfully navigate the lay of any land without a clear view of it? Having clear intelligence in the markets and wider economy is vital, albeit a challenge. Some markets may have limited information.
Also, founders are naturally busy people. Taking time to research opportunities, risks, strengths and weaknesses (SWOT), for instance, can be difficult when there are so many pressing matters competing for their attention – e.g. staffing issues.
Yet building a robust store of intelligence will be invaluable to help startups identify challenging times before they arrive – giving them more time to properly prepare. This could involve analysing market trends, competitor activities and industry shifts.
Without capable, strong hands at the helm of a startup, the team will soon lose morale and things will rapidly veer off course. Unfortunately, many founders and leaders are not good at recognising their human limits – giving themselves a break or holiday, when needed. Recognising the warning signs of leader burnout is vital, especially when economic conditions are challenging. Here, an experienced investor may need to step in.
Setbacks will always happen in an early-stage business. A resilient leader will recognise this and learn from them – communicating the lessons learned to other team members. A willingness to adapt to change is also an important leadership quality. Sometimes, wider conditions shift so dramatically that the current course cannot be maintained. Here, a strong leader will identify the new course and confidently communicate the new strategy to others – bringing stakeholders quickly on board.
Interested in finding out more about the exciting startup projects we have on offer to investors here at Bure Valley Group?
Get in touch today to start a conversation with our team and discuss some of the great investment memorandums we have available here:
+44 160 334 0827