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Business Challenges in 2023

07th Feb , 2023

Whilst there is no crystal ball, there are already signs of business challenges inherited from 2022 and new ones emerging for 2023. At International Business Mentors, our business mentoring and coaching professionals are optimistically preparing for what will be a challenging year ahead.

Areas to Watch Carefully in 2023

Lower economic outlook
Insecurity of supply chains
Meet changing customer expectations
Device and data security
Digital transformation ramping up
Escalating war for talent
Sustainability

Lower Economic Outlook

The economic outlook in many countries is high inflation, rising interest rates and slowing GDP growth. The factors impacting GDP include: the COVID pandemic, the Russian Ukraine conflict, and energy and supply chain shortages and disruption.

The slowdown in some of the world’s largest economies such as China, the United States and Europe will further dampen demand for exports from their major trading partners. This will particularly impact emerging and developing countries that are already being hit hard by high food and energy prices. Many economies will stagnate or shrink, and businesses need to prepare for that reality.

Businesses can better face these challenges by mapping out their costs, margins, profitability, returns and net cashflow generation with continuous improvement of these by customers, products and services, business process, functions, business unit, reducing spending and improving security of supply, and improving customer and other key business relationships. These are all areas where a business mentor can provide invaluable guidance and support.

Insecurity of Supply Chains

Supply chain security will continue to be a challenge, with COVID-created bottlenecks worsened by the continuing Russia Ukraine conflict as well as labour shortages due to the Great Resignation and shortages of staff generally. Poor supply chains have made parts and products harder to source, and pushed cost prices up (e.g., energy, grains, computer chips, oil).

Businesses should carefully consider how they set their ordering to compensate for actual or potential backlogs, and weigh up their risks of stock outs and net cashflow implications which could worsen their situation. They should also look at changing their pricing to customers to cover the extra costs in getting supply and holding stocks longer. Businesses should also be focused on long-term recovery and restructuring the business, with improved supply and stock control and pricing to customers to reduce the impacts on their business caused by similar shortages going forward.

Meet Changing Customer Expectations

Customers are currently seeking deeper experiences:

Customers entering physical premises want memorable in-store experiences. If your business has physical shops, consider more immersive experiences.
Online business offerings can add extended reality (XR) experiences such as virtual dressing rooms to “try on” clothing, accessories, and makeup online.

Businesses should ask how they can add more customer value by increasing the interactive experience.

Device and Data Security

Cyber-attacks continue to rise with phishing and ransomware scams. With businesses increasingly operating digitally and holding greater amounts of data, this acts as a powerful magnet for cybercriminals who steal data, lock out users and blackmail the businesses. Cyber threats to mobile and smart devices are also on the rise.

Companies should take proactive measures, such as:

Assessing their data backup and recovery processes
Conducting penetration testing and vulnerability scanning
Protecting sensitive data and preventing cyber-attacks

Other advancements such as quantum computing are emerging that may render existing security systems obsolete.

Digital Transformation Ramping Up

The take up of Artificial Intelligence (AI) continues to ramp up and is augmenting many businesses. Digital transformation is accelerated by technology developments and the interactions between AI, 5G, blockchain, the cloud and the Internet of Things (IoT).

To face this accelerating technological shift, businesses must think of themselves as tech businesses. These businesses need to redesign their processes and organisations to ensure their people have the technology and skills needed to collaborate with each other. They also need to work proactively with capable and intelligent technology to deliver practical and commercial business outcomes.

Escalating War for Talent

Businesses must be ready to cope with continued talent shortages as the war for talent escalates. Since the pandemic, many people have re-evaluated their jobs and life-work balance, leading to mass resignations in many sectors. Therefore, to attract and keep top talent, businesses must offer a great work environment and culture in line with the new world of work, including job flexibility, good leadership, diversity, good ethics, and fairness.

Across industries, our business mentors are seeing companies facing massive gaps for critical future skills. They will need to reskill or upskill massive sections of their workforce to get ready for the 4th industrial revolution. Businesses should consider taking on training people earlier in their careers, employing low-code or no-code software for critical needs, and instilling cultures of continuous learning and improvement.

Sustainability

Climate change is the world’s largest business challenge, and governments and consumers are demanding open sustainability practices and more environmentally sustainable products and services.

Businesses should review their business practices and audit their full supply chains. They should also consider using renewable energy, implementing sustainable packaging, reducing waste and facilitating working remotely, where appropriate, to help lower emissions.

Promoting the business’s sustainable can help satisfy consumers and help you identify efficiencies and produce savings to positively impact financial performance.

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At International Business Mentors, we successfully mentor CEOs, Directors, Owners of Business and Senior Executives, with a view to improve performance of the individuals and the business.