FEBRUARY 16, 2023
8 min read
2022 was undoubtedly one of the hardest years for the global economy, making the investment options for business owners even more narrow. The world’s stock market is transforming with the food, finance, and fuel crisis along with remnants of COVID-19 aftermaths. The Fintech industry, for example, is undergoing an investment falter with optimistic forecasts that the situation will bounce back in 2023 since the market value is steadily growing at attracting new startups.
Inflation becomes the leading global concern as COVID-19 steps back, with poverty and unemployment coming second and third, respectively. To top it off, more people are now eager to use Buy-Now-Pay-Later (BNPL) services with inflation kicking in, especially for breaking large purchases into several small payments for a few months. All of this shows that savings and price-consciousness are stepping up, becoming the main concern both for consumers and enterprise-level investors as about 70% of the US citizens proved to be prone to saving in the unstable time.
The IT investment priorities in 2022 were security, customer experience, and infrastructure. Cloud and automation were also at their peak among the best IT investments. However, in 2023 there are no risk-averse domains or industries, and investments shall be carried out with extra care.
So, DashDevs, to figure out the best investments for small business owners, we’ve gathered these helpful reference points.
Market Expectations For 2023: Look Closer At Determining Factors
To identify the IT priorities for 2023, dig deeper into the current market background, research investment factors, and then decide. Here are the ten factors you might consider when building your investment capital and strategy as an IT business owner.
1. Inflation Consequences
Inflation can set a backdrop on your business course. Even if your product or your flow of clients seems loose in touch with the inflation rate itself, in reality it’s hard to underestimate the impact it has on your business one way or another. For instance, in the fintech domain, the central banks feel the most as they need to regulate their supplies and costs accordingly. Moreover, inflation also matters much when it comes to reducing the purchasing value of cash and raising the cost of goods simultaneously.
What’s the current situation with inflation? Bloomberg projects that inflation might reach its peak in 2023, climaxing but unlikely to drop below 8%. Meanwhile, NIESR claims that no significant decline in inflation is forecasted for 2023. Since its consequences will most likely affect the technical domains as well, DashDevs advises you not to take any big investments this year apart from digitalizing your own business.
Investment in technology is always a step towards competitive advantage. Despite the overall situation, businesses are inclined to pour their finances into the metaverse, sustainability, and high-risk “moonshot” investments, according to Gartner.
2. Stocks Ownership by Big Five Tech
The five leaders that share global dominance in the stock market are Facebook, Apple, Netflix, Alphabet, and Amazon. They’re cutting the delicious big chunk of the S&P 500 (22.9%) and the Nasdaq 100 (41%), even after staff reduction in Meta recently. But do you see what this dominance is about?
First, it may be equated to illusive diversification as an investment in stocks rarely impacts the overall S&P index. Second, when the big stock share is in the hands of only five players, the wealth destruction affects them to a greater extent, leaving less chance for recovery in case of market bounces. Third, the tech tycoons’ prevalence in the market also evokes the question of economic welfare.
Does the chase for innovation always justify their ultra-conservative capital management approach? And ultimately, the pandemic has also stirred the pot by pouring even more money into the big techs’ pockets, but what would happen now under more fair competition conditions, with inflation taking its toll on even the biggest of corporations? Better answer these questions before starting stock funding in order not to lose money.
3. Economic Crisis Shapes The Trends
Take this into account. The crisis affects everyone and everything. So, while contemplating where to invest in 2023, you should consider all variables in today’s market conditions and what changes it drives to the future.
First, let’s start with what’s happening in the modern day in the investments field. The most popular and proficient segment to put your money in is a ‘Buy Now Pay Later’ service (BNPL) that draws attention to itself immensely, with more people wanting to split large payments. The global BNPL market amounted to $90bn, and with the staggering growth, it’s projected to reach an astounding $4 trillion by 2030.
Metaverse, an innovative technology that decoys investors no less, is projected to reach $13 trillion by 2030 due to its versatile usage. It can be used as a virtual hub for workplace imitation or as a place to demonstrate the goods. People invest in building a metaverse for themselves or buying stocks from companies that hopped on a trend earlier.
4. Common Prosperity Principle
Even if you consider yourself far away from politics or simply disinterested in it, don’t make a snap decision by undermining the weight of this factor as an IT owner. The political objectives inevitably affect the market, whatever narrow niche for starting your business you’ll choose. At the end of 2021, prosperity or internal circulation was the most prominent ideological trend to sneak up on business. This principle originates from China but continues to conquer all other parts of the globe. Its gist lies in achieving global growth by utilizing social equality and diminishing the wealth gap.
Consequently, the supervision of the businesses is also subject to changes: illegal income banning, stricter taxation prescription, and charity and donations encouragement. An excellent example of this principle is Tencent Holdings, which has confirmed its readiness to invest $15.47bn in common social well-being. The other social game-changer is the shared ecological sustainability that is now massively supported by modern tech companies. Are you ready to belong to this high aim too?
5. Execution Risk
Though you might’ve given the market risk more attention in the past, today’s execution risk brings a new concern to business owners seeking a successful investment. In 2023, this factor can root deeper, especially when we take private equity deals.
In short, the private equity market is characterized by high valuations, starting from a venture and ending with a buyout. Its popularity stems from peers’ public trading and dependence on the return on investment. It explains why the bid in capital fundraising for private equity increased by $380bn by the end of 2022. In particular, the most lucrative private equity investment vectors include energy, microfinance, and financial services, whereas housing, infrastructure, education, and others follow the lead. Hence, if your business relates to one of these industries, consider the execution risk more carefully.
6. Digital Transformation
According to the European Union report released in 2021, a digital transformation strategy gets in the top-3 adoptions by the SMEs in response to the COVID-19 wind of change. According to Statista, the total global spending on digital transformation technologies can amount to $2.16 in 2023.
Our experts assess there are two main progress drivers: the structural redesign of the business model and the development of the new products. In both cases, the zest for automation turns digital transformation into leverage for the marketing upgrade, able to comply with the customers’ needs more profoundly. The illustrative case is brought by AI, which, according to McKinsey and Company, attracted 52% of surveyed companies to devote 5% of their budget to AI. The number is expected to grow to more than 60% in the coming three years.
However, let DashDevs be blunt. Digital transformation doesn’t always coincide with the well-thought regulatory governance, in which European companies still dominate. So, because of legal ambiguity, the realization of the digital transformation plan is unequally distributed among the regions.
7. Data Handling
Does data handling deal with privacy violations? It is a promising instrument in the financial services and insurance firms that allows for identifying the threat of money laundering with the help of AI techniques.
It’s nearly impossible to imagine the IT business of 2023 that handles the issue of cybersecurity more effectively than innovative tech does.
It gets hard to underestimate the rising concern that contemporary users get about personal data disclosure. It is why customers frequently use VPNs or false information for registration at the new service. The statistics only prove this phenomenon: 63% of UK consumers daily resort to VPN apps or other security tools. The US shows a similar behavior pattern — 53%, while the most cautious European users are in Spain (36%), Germany (29%), and France (21%). So, the main rule of investing for business owners in 2023 is to ensure your investments are consistent with the users’ attitude to data handling.
8. Agile vs. Managers
Agile implementation, DevOps evolution, and remote or hybrid work models are the obvious indicators of an organization’s workflow restructuring. One of the tangible consequences of this change is the reconsidered role of the manager. From then on, the corporate teams will require fewer management teams as the advanced work operation significantly diminishes the need for traditional team leads.
Now, it wouldn’t make the position disappear, but considering that 62% of teams already relied on self-service in 2021, brace yourself for lesser control on the managers’ part. Meanwhile, even now, this approach proves its efficacy by speeding up IT processes and reducing the product development life cycle, which is surely a benefit for your future investment goals.
9. Sales Pipeline Reorganization
Finally, here comes the moment when the businesses have gone for redesigning the sales pipeline and the attitude towards the poor-fit customers. If earlier, the companies were ready to clutch at straws to retain every prospect, further on the focus on the product-customer match quality would be minded more carefully. This is crucial since the costs for this hang on with the respect to profits obtained.
So, how investment works in business in 2023? According to this principle, you should distribute your costs more evenly and let go of unprofitable, unproductive customers rather than push your sales department. Sometimes it’s better to free up your staff for more important tasks than milk every possible and impossible lead.
10. Modular Business Focus
What does modular technology look like in software development? In essence, it refers to a software with a flexible architecture, i.e., susceptible to plug and work with other products. That’s why there’s now a strong tendency to create a product with a modular architecture, which allows easy change-making instead of being chained by the rigidly set composition.
DashDevs follows this trend as well by creating fintech modular-based software products that can be reused and customized according to the ever-changing market conditions. So, making a decision about investing in this technology can lead you to greater profits and productivity if you end up using it for your software, too.
How To Choose the Best Investment Strategy In 2023?
You’ve read through our factors to consider while modifying your IT investment strategy in 2023. Hopefully, you’ve got some ideas to try. Making a short or long-term investment, remember to do so regarding marketing conditions and trends.
Contact DashDevs software company to help you with creating the dream app or getting expert consulting in the sphere of fintech. Let yourself make a clean break for 2022!
What five factors to consider when developing an investment strategy?
Investment strategy can depend on a lot of factors, some of which are but not limited to:
- Your investment goals;
- The financial situation;
- The market conditions;
- Available capital;
- Expected returns.
What are the seven rules of investment to achieve success in the US?
The seven rules of successful investment, according to Charles Schwab, are the following:
- Establish a plan;
- Start saving today;
- Diversify your portfolio;
- Minimize fees;
- Protect against loss;
- Rebalance regularly;
- Ignore the noise.