A recent survey of tech business leaders has revealed that 83% are concerned about a looming recession. The European economy certainly looks tough. Uncertainty about how things will unfold with the Russian invasion of Ukraine, the evolution of the skills crisis, supply chain woes, rising costs and inflation are certainly affecting all of us. We are paying the cost of Brexit, COVID, and the energy price cap will be affecting homes and businesses alike. The next Prime Minister will have a job and a half to deal with the road ahead.
However, the same study also shows that 59% of these UK founders are optimistic for 2023, despite the concerns felt in the face of the current economic climate. A further 52% plan expansion in the next 12 months. If you’ve ridden through a recession before, you’ll know there is a lot to be said for the power of positive thinking and not talking ourselves all into a crisis.
When asked about the biggest threats to business in the near future, 37% said the economic climate is the biggest threat to their business, followed by staff retention (26%). To make matters worse, 77% believe a potential recession will affect investment in the market, meaning that tech businesses will have to be extra resilient throughout the next year.
Sadly, the cost of living crisis dealt another blow with tech leaders planning to increase product and services costs (49%) as they prepare for a battle over the next few months.
On skills, the news is mixed. The media seems to swing from a huge shortage of talent and a busier-than-ever job market, to companies like Google and Microsoft pausing hiring amidst fear of a pending recession. Anecdotally, we are certainly hearing the same – hire with extreme caution. That said, the tech industry is more resilient than most, and if we look back at COVID this is certainly the case. The winners of a challenging economic environment will be those that can digitise the fastest, and act with agility to change their business model.
But is that the only thing to differentiate the winners versus the losers of recession? One seasoned tech leader and board advisor for a number of tech companies, Adam Hale, said in response to the survey: “These are certainly interesting times for startups and scaleups in the UK tech sector, with revised valuations, COVID, Brexit, war, rising prices, political instability and a looming recession. Recessions don’t have to be bad news, they are an opportunity for the best firms to demonstrate their market leadership and come out stronger. That means keeping closer to their customers than ever before and driving the quality of everything they do up, mistakes are not forgiven in a recession. Some companies will not make it, but as they say in a tornado even turkeys can fly.”
When asked what has been the single worst event for business, 43% respondents pointed to COVID, followed by Brexit (25%) and war in Ukraine (18%). The 46% that stated Boris was bad for tech business will be pleased that there is one less challenge to deal with. However, businesses were cautious in their advice to entrepreneurs considering starting up in the current market, with 47% believing they would encourage them whilst 43% said the opposite.
Forty-four percent think remote working will have a negative impact in an uncertain economic environment, and that people need to be together in an office environment to ensure maximum productivity and collaboration. Re-grouping your teams to form a positive force is certainly one way to keep people’s heads up and minds focused.
Following a tumultuous couple of years for the global economy, it might be true that the tech industry is ready for a difficult end to 2022. But it’s testament to the UK tech sector’s resilience and entrepreneurship that its leaders are still optimistic about 2023, despite the triple challenges with Brexit, the Ukraine War and the threat of looming recession.
Look ahead with optimism, move fast, draw your team close and work tirelessly to help customers and the community, and you might just ride the wave and emerge stronger and better for it.