For start-up founders and small business executives, this season has been a time of immense challenge, particularly with an impending recession looming on the horizon. While these professionals remain optimistic that their premises are sound and their strategies are reliable, there is no denying the anxiety that comes with news of larger firms announcing stunning layoffs and spending cuts.
According to a survey by DigitalOcean, small and medium businesses (SMBs) are feeling the economic slowdown, but they remain optimistic about the future.
While 32% of SMB respondents say that the economy did not impact their business, 14% say that it has impacted them positively, with 48% rating their business performance as better now than this time last year.
Though economic uncertainty has been a headline lately, small businesses are still optimistic about the future. Only 20% say that ‘economic uncertainty’ is their top challenge today. An additional 16% cite meeting revenue targets as their top challenge.
Businesses are making a lot of changes to stay afloat. 37% of businesses have cut back spending, 21% increased prices, and 24% made changes to their products/services.
However, 26% of businesses haven’t made any changes, of whom 48% say that they won’t need to make any changes in the next 6 months.
How start-ups and SMBs view their business to be in 2023
Looking ahead to the future, many start-ups and small businesses feel positive about their prospects. In 2023, 63% say their business outlook is somewhat or very positive, while 79% have a positive outlook for the next 3 years. Only 5% feel their business outlook for the next 3 years is negative.
However, sole proprietors have not adopted this optimism, with only 51% stating they feel somewhat or very positive about the upcoming year. This is significantly lower than the levels seen among businesses with 2-9 employees (64%) and 10-24 employees (69%), indicating that single entrepreneurs remain more cautious as we look ahead to 2023.
The funding landscape for start-ups has been rocky these past few months, with experts warning against beginning any new fundraising plans. Despite this, 23% of start-up founders are aiming to secure new funds in the coming 6 months.
29% have decided to delay new fundraising efforts. Of those who have delayed, 42% think they may only postpone it for a year or less and another 27% predict a delay of up to 24 months.
Security remains a top concern for start-ups and SMBs
With cyber threats on the rise, it’s no surprise that information security is top of mind among businesses small and large. Start-ups and small businesses have identified their main security challenges as a lack of time to manage cyber risks (25%).
This was followed by data loss events/data theft (23%) and a lack of budget to manage security (18%). Surprisingly, only 8% reported experiencing a security breach over the past year, though this number may rise as more businesses adapt to the new digital landscape.
With more than half of all respondents saying they are more concerned about cyber security now than this time last year, it’s no wonder why start-ups and small businesses are quickly creating armor against phishing and other cyber attacks.
SMBs are prioritizing cost savings throughout their technology stack
Many small businesses are trying to save money by cutting costs in their technology stack. 20% of respondents said that cost of services was the biggest challenge related to technology. 16% said finding the right tools and maintaining services as major challenges.
A lot of businesses have been spending more money on cloud infrastructure and technology solutions in the past year. 47% say their cloud spending has increased a little, while 14% say it has increased a lot. 53% and 9% say their overall technology spending has increased a little or significantly, respectively.
In the past year, more people have started using cloud solutions. 57% of people say their usage of cloud solutions has increased in the past year. Only 3% say their usage has decreased. This shows that people are still relying on cloud solutions.
Cloud and technology spending is increasing for most businesses. For start-ups and small businesses, one way to reduce costs is to migrate to a new cloud provider. However, migrating cloud providers can be a difficult task. Our research found that half of all businesses have done this in the past, and for many, it was not an easy process.
The top reason for migrating cloud providers is to save money. Other reasons include getting access to additional products or features and finding a provider that offers solutions tailored specifically to their needs.
Wrapping up:
Despite economic uncertainty, many start-ups and SMBs are optimistic about the future. Larger technology companies are conducting layoffs, but smaller businesses are looking to technology to help them save money. Some businesses see opportunities in the current environment. However, businesses that are flexible and invest in the right technologies will be able to scale successfully.
Source: DigitalOcean
