One of the best perks of working at a digital agency is being able to interact with so many budding tech entrepreneurs. Every week there’s a new person with plans to create a product or service that will challenge the status quo, help overcome common problems, or create entirely new opportunities for people.
In accordance with a recent studyaround 42 percent of full-time working British adults dream of quitting their jobs and starting their own business.
Such an entrepreneurial spirit should be celebrated, especially considering what we have experienced in the last three years. The pandemic could easily push people toward conservatism; in fact, it had the opposite effect, encouraging thousands more would-be entrepreneurs to take the plunge and start their own business.
Just over 753,000 new start-ups were founded in the UK between March 2021 and March 2022. This is the second highest number of startups registered in one year in Britain, ahead of only the 810,000 startups founded in the previous 12 months. .
However, the economic landscape has worsened since March 2022. Where there was hope that the hardship and economic uncertainty caused by Covid-19 would finally disappear, the reality has been difficult.
What the economics mean for tech startups
Rapid growth of inflation affected businesses as much as consumers. For starters, businesses responded by paying employees more; wages grew at a record pace in 2022. In addition, he has pushed up interest ratesinfluencing how much a startup can afford to borrow when considering a business loan.
Similarly, other overhead costs of technology companies – from commercial rent supply chain costs – rising. All the while, the cost of living crisis eats away at the purchasing power (and appetite) of potential customers, whether the business relies on B2C or B2B trade.
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The current economic climate is also affecting the technology investment sector; Investment in UK technology decreased by 22 percent last yearone of the steepest waterfalls in Europe, amid tough economic headwinds.
To put it bluntly, it’s a challenging time to start and grow a new company. But entrepreneurs should not be overly disappointed and despair.
For tech startups – those that are early stage or even still in the ideation phase – these economic conditions mean that it’s never been more important to build and deliver tech products as efficiently as possible. And that’s not bad.
Accepting the challenge
Wise allocation of own resources is very important for most startups. Being frugal is a good practice – investors will want to see it when it’s time to raise financing, and being frugal will help an entrepreneur maximize their business without having to borrow or lend capital.
So what does this mean for developing, launching and scaling a tech startup?
Minimum Viable Product (MVP)
Financial efficiency must be considered at every stage. During the development phase, for example, entrepreneurs should take a hard look at what their minimum viable product (MVP) will look like.
MVPs are difficult to define, given that they can vary greatly in form, function, purpose, and audience. Instead, it is better to clarify the concept: an MVP is the first form of a product that can be released by a user with the purpose of collecting and analyzing user data to determine future development.
With no easy money in circulation, entrepreneurs must focus on building an MVP on time and on budget. Bring something to market that demonstrates the core purpose of technology products, then worry about adding more functionality – and then bells and whistles – later, ideally when the business is profitable or seed investment can be obtained.
At the heart of the “lean” startup methodology is the principle of getting the product into the hands of customers as quickly as possible, eliminating the waste of resources and maximizing efficiency. It can then be tested on real use cases and the value of the product can be assessed. Internal feedback loops can be eliminated more quickly and resources can be focused on building and learning, allowing startups to prove the value of their concept and present a solid viability case to potential investors.
Entrepreneurs and their development team should define what their MVP will look like and work towards that clear goal.
Launch and scale
With a product ready to ship to customers, entrepreneurs can prepare to launch and scale their tech startup. But still, the profits are probably missing, and the profits may be months or years away, so it’s important to keep that wallet in your hands.
Again, the key to successfully scaling any new technology product is a thoughtful and thoughtful planning phase. It may sound cliché, but trying to build on a bad foundation is likely to end in disaster.
To scale a tech startup, and to have an effective sales and marketing strategy, entrepreneurs must have a solid product roadmap focused on user needs. They can then update their offering based on feedback as more and more people use it, allowing them to prioritize the most important features and functionality needed, scaling the product based on the utility and value that additional functionality provides.
Continuous, flexible development based on a feedback loop will not only ensure that the product evolves according to the needs of its users, but will also help to use a lean approach. This will prevent startup founders from focusing on the wrong things; it forces businesses to listen to their customers and create something that best meets their wants and needs.
Focus is everything. There’s no point wasting time or money looking for unnecessary features or failing to sell a product based on something customers don’t really care about.
Focus on what you do best
In 2023, the best tech startups are likely to be those that focus on doing one or two things and do them exceptionally well. Also, they can evolve to do much more, but in the current economic climate, having a clear vision for the MVP and its agile development after launch is essential.
Personally, I am excited to see how entrepreneurs are responding to the challenges of high inflation, a potentially prolonged recession, and declining investment. You can be sure that entrepreneurs will find a way to scale their tech startup, and finding a way to succeed on a tight budget is a fantastic skill to use at any time.
Ritam Gandhi is the founder and director Studio Graphene, a London-based company that helps develop clean tech products, including apps, websites, AR, IoT and more. The company has completed more than 250 projects since its launch in 2014, working with both startups and product development teams at large companies