The business environment has changed dramatically over the past few years. As a result of the pandemic, the invasion of Ukraine by Russia, economic obstacles, and the rapid speed at which technology is developing, enterprises will continue to face many challenges in 2023. As we move into the new year, inflation and a labour crisis will continue to be a concern in the region.
Uncertainty is unacceptable in the minds of business leaders today as they attempt to chart a path toward growth. According to Max Loh, Singapore divisional president of CPA Australia, globalisation and international trade are colossal growth and prosperity-driving forces across economies and are among the top concerns for organisations and businesses.
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He also stated that central banks and governments are worried about economic recession and their capability to engineer a soft landing, even while attempting to control inflation. Let’s take a closer look at some other top challenges for startups and SMEs in the upcoming year and how businesses can address them.
Inflation and supply chain issues
Globally, the economic outlook does not appear to be promising. Experts predict continued inflation and slow economic growth. The war in Ukraine exacerbates supply chain issues that emerged during the COVID-19 global shutdowns, requiring startups to improve resilience to combat these issues and stay proactive. Startups can try to deal with deficiencies and rising logistical costs by reducing their exposure to volatile commodity market prices and developing protective measures. Approximately €920 billion of cumulative gross domestic product (GDP) loss is forecast to occur across the Eurozone by 2023 as a result of supply chain issues, according to a report published by Accenture.
Meanwhile, inflation is skyrocketing, and predictions indicate that many businesses and enterprises will vegetate or downsize soon, as is seen with tech giants such as Twitter and Meta. Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), announced that the organisation had revised its forecast for global growth to 2.9% in 2023. Financial instability and recession are rising risks, according to the IMF.
Increasing customer expectations
Customers increasingly request more in-depth experiences in the real world and the metaverse. In brick-and-mortar stores, consumers are not just looking for products; they seek memorable, immersive, and innovative events even in a physical shop. Online retailers should consider incorporating extended reality (XR) experiences such as virtual dressing rooms, which allow customers to try on clothing, accessories, and makeup without leaving their homes.
Technology has become particularly pivotal in these scenarios, helping facilitate processes and removing the hassle from the consumer experience. As technology continues to evolve, we will see more recommendation engines that assist in deciding what products to buy. There will also likely be an increase in online customer service portals to help with after-sales issues and problems. The new year will see these elements play a vital role, with immersion and interactivity being this year’s keywords.
War for talent
In 2023, companies must be prepared to cope with the continued shortage of qualified employees. For the past few years, the “War for Talent” and the skill levels of workers in Southeast Asia have raised concerns. It now appears that the war is growing in intensity. The pandemic increased the number of people working from home, and many found a better work/life balance. This way of working inspired many talented individuals to reassess their lives and the impact of their jobs, leading to great resignation and quiet quitting movements.
The workforce situation adds pressure on employers to provide attractive career opportunities, the flexibility of hybrid work, and an enticing work environment and company culture. In 2023, offering employees meaningful work, opportunities to learn and grow, flexibility, and diverse, value-driven work environments will be imperative for retaining staff.
Accelerating digital transformation
Enterprises and businesses are already beginning to benefit from artificial intelligence (AI), a trend that is likely to continue in 2023. Moreover, other innovations and technological advances, such as 5G, blockchain, the cloud, and the Internet of Things (IoT), are building and speeding up the use of AI, something that is mutually reinforcing.
Increasing demand for sustainability
Global awareness is growing around the impending climate disaster, which will present a significantly more challenging obstacle than anything we have faced in recent decades. It will overshadow the threats posed by the recent pandemic. As a result, it has become evident that investors and consumers prefer to deal with businesses with appropriate environmental and social credentials.
Additionally, shoppers are increasingly affected by conscious consumer trends, and when selecting companies to do business with, they prioritise factors such as ecological impact and sustainability.
Undoubtedly, overcoming these conspicuous challenges in 2023 will be essential for businesses and enterprises. Early acknowledgement and comprehension of these top challenges for startups and SMEs in the new year are vital to helping enterprises make the right decisions and formulate the right strategies if they wish to survive and thrive in what looks set to be a difficult year.