The Covid-19 pandemic was a catalyst for huge change in the way we all live and work. Many companies had to quickly pivot to a work from home model. This resulted in an acceleration of technology adoption / digital transformation by 5-10 years.
Before 2020, the US was experiencing a 40-year decline in entrepreneurship. The pandemic has resulted in a huge entrepreneurial boom. From 2019 to 2020 the number of new businesses created grew by 24%.
In 2021 the new business applications ballooned to over 5.4 million.
Potential reasons for this surge include:
– 4.3 million laid off workers received stimulus payments.
– A bull market combined with low interest rates.
Looking back at 2022, more than 5 million new business applications were filed according to the US Census Bureau. This is about 14,000 new businesses a day.
However, the economic environment is shifting. A looming potential recession and rising inflation may result in a turbulent 2023 for new companies. Even in good economic times, about 50% of new businesses fail.
Additionally, there is once again a shift taking place in the workplace post-pandemic. The last couple of years have been favorable for employees who began leaving jobs in a wave known as “the great resignation”.
However, the bargaining power has shifted back to employers as many businesses are tightening up.
A survey from Resume Builder concludes that 90% of companies are expected to require a return to the office this year. This is a strong change from the hybrid policies that became popular during the pandemic.
MicrosoftMSFT has announced plans to reduce their workforce by 10,000 employees. AmazonAMZN has begun layoffs that are estimated to impact 18,00 people. In November 2023 Meta laid off more than 11,000 employees. As companies face rising interest rates coupled with less consumer spending, we can expect the layoffs to continue.
As businesses / leaders prepare to enter a cycle of adversity, here are some tips:
– In times of great uncertainty, it is very important for CEOs and leadership teams to be present, in person, in front of employees.
– Layoffs / financial austerity and restructuring are part of the tools many companies will use. Connect with your most valuable and strongest employees; they are the most “recruitable” and need the reassurance they are part of the go forward team.
– In these difficult times, employees look for positive points of reassurance. Recognize your employees who are high performing in these difficult times.
As a board member, I recommend everyone take the time to learn from the wisdom of their friends and colleagues.
Many people in your life have likely experienced several recessionary cycles and have a lot of pattern recognition and scar tissue they can share.