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How to Run a Tech Business in 2023: 4 Tips From a Ukrainian Startup CEOby@alexfedorov
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How to Run a Tech Business in 2023: 4 Tips From a Ukrainian Startup CEO

by Alex FedorovMarch 2nd, 2023
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The year 2022 was a difficult one for businesses all over the world. Here are lessons from managing an IT company in 2022 that can be useful this year. The global economic recession and massive layoffs are key factors impacting tech startups. Focus on profitability, and run rate in 2023, and companies must become profitable as soon as possible.
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The year 2022 was a difficult one for businesses all over the world. Here are lessons from managing an IT company in 2022 that can be useful this year. You can follow the tips below to develop (or save) your business in 2023.


The COVID-19 pandemic and subsequent economic recession created many challenges, including decreased demand, reduced funding, and increased competition. Right now, many entrepreneurs still have challenges to meet, as evidenced by the many layoffs happening worldwide.


In 2023, many tech businesses will continue to face the challenges that started last year. The global economic recession and massive layoffs are key factors impacting tech startups this year.

2022 was a hard year for many countries and businesses.


The ongoing war in Ukraine has significantly impacted the world's business climate. I am proud of Ukrainian entrepreneurs who care for their people and continue to work,  develop businesses, and attain results, despite all problematic conditions. After a year after a full-scale war in my native country started, I decided to share tips about managing businesses.


With that in mind, here's how to struggle and survive, meet and cope with crises smoothly in the tech business in 2023.



1.Focus on Profitability and Run Rate

This will be particularly challenging for VC-backed startups in 2023, as it will be much harder to raise the next round of funding. We are now witnessing a lot of down rounds, e.g., a recent Stripe round, and many start-ups could be on track to lose their unicorn status. Therefore, it's crucial to focus on profitability, and run rate in 2023,  and companies must become profitable as soon as possible.


Investors will look for companies that can generate positive cash flows in a challenging economic environment. Companies can demonstrate their viability and competitiveness to potential investors by focusing on profitability. A recent Harvard Business Review site publication says, "It's mastering the "extrapolation" stage when startups begin to focus on profitability, not just growth." Profit is a new king.


2.Be Cautious With New R&D Ideas

In the current economic climate, it's important to double-check the feasibility of new, non-profitable business units that may not see a return on investment and that may lead to decreased demand due to the recession. A recent report by McKinsey & Company suggests that companies should focus on their core businesses rather than pursue new projects that could distract from their core objectives. By focusing on the core business, companies can better withstand the challenges posed by the recession and emerge stronger on the other side.


Entrepreneurs should pay attention to the current profit spheres of the company/products and develop them. Following this advice will help save your business and company. A substantial R&D investment can, for instance, lead the company to collapse, but it is important to maintain a balance here and not become the next Nokia or Blackberry.


3.Try to Get Independent of Performance Marketing

The cost of paid marketing is expected to increase in 2023, while the LTV (lifetime value) will grow at a different pace. For instance, a report from eMarketer (Oct 2022) predicts that total media ad spending will increase by 6.9% year over year in 2023.

This growth is driven by the increased use of digital devices and the shift towards digital advertising by businesses of all sizes. The report also states that the rise in digital ad spending will likely drive up the cost of paid advertising, particularly for popular platforms like Facebook and Google. The golden rule of the last 2 years: CPA growth faster than LTV, and that’s not to mention the ever-rising operating costs, which affect profit margins substantially.


So, it's crucial to focus on developing organic and referral traffic sources. This will help to mitigate the risk of rising marketing costs and ensure a more sustainable long-term growth strategy. According to a World Advertising Research Center report, companies focusing on organic and referral traffic are more likely to experience long-term success and sustainable growth.


By reducing dependence on performance marketing, companies can build a loyal customer base that is more likely to recommend their products and services to others. Users will become brand ambassadors of the company's products. By prioritizing these sources, businesses can minimize the impact of rising marketing costs and ensure long-term success.


4.Take Advantage of Mass Layoffs. ​​

Finally, it's essential to take advantage of mass layoffs, which are happening worldwide. Mass layoffs mean a lot of talent on the market, and this is a good time to hire top talent. As Forbes reports, "layoffs can be kind of like a cold shower for talent," which can be an opportunity for businesses to hire top performers eager to get back to work.


Identifying and hiring talented individuals during a recession can bring new perspectives to a company and drive its success forward. Companies that effectively recruit top talent during these times are more likely to become stronger and more competitive in the near future. With many highly skilled individuals seeking new opportunities due to mass layoffs, companies can take advantage of this talent pool to add experience and skills to their teams.


With these tips, you can leverage negative economic changes positively. You should take advantage and see the opportunities during the ups and downs period.


2023 promises to be an even more challenging year for businesses. However, with the right strategy and thoughtful steps, companies can survive and thrive in the nearest future, as every cloud has a silver lining.