Starting a new business in any year can be a risky endeavor, and in that 2023 is no different. However, where there is risk, there is opportunity and entrepreneurs thinking of doing something special this year should not be dissuaded. They do, though, need to keep some things in mind.

Going to market with a new business or business proposition can be a major decision. It requires meticulous scrutiny of all the potential pitfalls and prospects the company could face, from the quality of competition to the global economic outlook.

In 2023, among the most significant risks to consider are the residual impact of the pandemic, the ongoing cost-of-living crisis, and the potential for increased competition.

By contrast, 2023’s opportunities come in the form of ever-increasing online shopping, the potential for a boom in the economy, and the emergence of new technologies.

Inevitably, the overall risks and opportunities associated with starting a new business in 2023 will vary depending on the type of business it is and shifts within the economic climate.

In this blog, I detail what I believe are the main risks and opportunities facing the entrepreneurial Class of 23′ and offer some advice for those ready to don the wet suit and snorkel and take the plunge. 

 

Economic Factors

At of the time of writing, the economic climate in 2023 remains difficult to predict. The UK economy is expected to grow at a slower rate than comparable countries, but such predictions are often proved to be wrong. The best anyone can say at the moment is that the outlook is uncertain, and though this is not the worst environment to set up a new enterprise, it’s also not ideal.

Nevertheless, despite current economic uncertainty making it difficult for businesses to plan for the future, other recent events have generated certain benefits upon which entrepreneurs can capitalise.

 

The pandemic triggered a shift to digital and remote operations. Online shopping increased, and businesses with remote models were suddenly able to recruit talent from anywhere in the world. Moreover, the stalling of global economies created a buyers’ market, and those businesses that responded by developing the most compelling propositions, discounts, and incentives have continued to perform well.

However, the pandemic, abruptly followed by a cost-of-living crisis, hit the pockets of many consumers. Yes, they moved their spending online, but they have also become much more judicious about where they spend, and unknown, untested businesses may be viewed with added caution.

With bruised economies come spikes in unemployment and the consequential loss of consumer spending power. This, too, could hurt certain industries, especially those that deal in ‘luxury’ commodities or that depend on a large customer base to survive. Large-scale unemployment is also often a trigger for increased crime rates, and business premises can become a prime target for those pushed towards criminality. As such, it is vital that security is built into the business strategy by partnering with accredited security companies who specialise in providing products and services to keep people and assets secure.

Economic uncertainty also spooks another corporate segment crucial to business growth: investors. Until there is more clarity around where the economy is heading, investors may be wary of ploughing capital into market entrants, meaning initial ambitions may need to be moderated.

Nothing would make me happier than to be speaking of a thriving economy and all the opportunities ready to be seized. But this is the reality, for the time being, at least. That said, thorough market research coupled with a single-mindedness to succeed has seen businesses start and flourish in worse economic conditions than this.

 

Technological Factors

2023 is set to follow in the footsteps of recent years in that the technological landscape will continue to evolve, presenting both risks and opportunities for those looking to start a business.

With remarkable advancements in artificial intelligence, machine learning, and data analytics, businesses can now access unprecedented insights into their operations and customer needs. Used effectively, these technologies can provide a solid competitive edge, allowing businesses to make better decisions and improve customer experiences. Elsewhere, cloud computing and the Internet of Things (IoT) are becoming more commonplace, allowing firms to store and share data more securely and efficiently.

However, these technologies also invite risk. Entrepreneurs must be aware of the ever-changing security landscape to protect their data from cyberattacks. Furthermore, businesses need to be able to keep up with emerging technologies, which can require significant capital investment.

Overall, 2023’s technological advancements offer exciting possibilities, which should translate to a renewed enthusiasm for those looking to hit the market with something different. Those willing to take the risk and leverage the full potential of these innovations could be met with plenty in the way of reward.

 

Social Factors

With the pandemic mostly behind us and inflation predicted to plateau as the year progresses, (today seeing a fall from 10.5% to 10.1%), the social climate in 2023 should gradually move to one of increased optimism, a growing sense of possibility, and a revived confidence around taking risks and making investments.

For entrepreneurs, this creates fertile ground to establish a business with more than just profit as an incentive. The potential social benefits of starting a business in 2023 include the chance to create jobs, contribute to the local economy, promote sustainability, and help to inspire others. There is a real opportunity to make your mark on your immediate world and become a business that becomes a beacon of progress in your community.

The last few years have also changed social attitudes in a way that favours new and small businesses. As the pandemic and the subsequent cost-of-living crisis forced many smaller, independent companies to close their doors for good, the importance of local economies came to the fore.

These catastrophic events made people realise just how critical small-scale enterprises are to the communities in which they operate. Not only do they help to create local employment, but their very nature stands at odds with the industrialisation and pollution of the multinationals.

The small business environment may be a little competitive, and it’s growing every day. Still, opportunities are abundant for people who want to start their own businesses the right way and with the right values. Indeed, you may find yourself pleasantly surprised by the level of support you receive from your community as there is a long-running tradition in the UK of shoppers opting to spend their cash with local enterprises over established brands and big corporations. Never more so is this true than when people can see that market conditions unfairly disadvantage their regional trailblazers.

Of course, there are also potential social risks to consider. These include decreased consumer spending due to economic uncertainty and the potential for increased competition in specific markets. It is essential to consider these risks when weighing the decision to start a business in 2023, but there is little doubt that the potential rewards are compelling.

 

Final Thought

Irrespective of the challenges that 2023 is likely to present, opportunities abound for those entrepreneurs willing to put in the groundwork.

With proper planning and preparation, budding risks can be mitigated. Moreover, a new business in 2023 has the potential to benefit from an economy that should stabilise, the availability of transformative technologies, and the ability to take advantage of new markets.

The success of a new business is also likely to hinge on Environmental, Social and Governance (ESG) reporting and its growing prominence in 2023. This is due to the heightened customer demand for transparency and the expectations of younger generations for employers to adhere to higher standards than their predecessors. In fact, it has been reported that almost half of investors are willing to divest from companies that do not take sufficient action on ESG issues. Given that new businesses are often reliant on investment, they cannot afford to ignore this type of reporting.

Enhanced visibility into commercial and human resources data will prove essential for the purposes of accountability and expedited compliance. The development and upkeep of a robust ESG strategy are contingent on the quality and scope of data available. Cloud-based solutions will be indispensable in aggregating information from all areas of the business, forming realistic objectives and tracking progress to satisfy customers, employees and investors.

It has been demonstrated that meaningful progress towards ESG goals can positively affect investment opportunities, consumer spending and workforce productivity – a particularly pertinent consideration as we enter a period of heightened financial uncertainty in 2023.

Yet, risks such as the rising cost of labour, increasing competition, and a global economic landscape that may well recover but hasn’t so far should not be taken lightly.

For those entrepreneurs still committed to their dream, the key is to be well-prepared and to focus on long-term business sustainability over short-term gains. By doing so, you can maximise your chances of success and position yourself to capitalise on the opportunities that will come as 2023 unfolds.