Fuelling growth strategies with global teams and AI
Scaling businesses in today's economy
Why global teams and AI are fuelling growth strategies
With industries feeling the pinch of a downward economy and hustling to sustainably balance profitability and burn rates, insiders are looking to the past for modern day solutions to scaling businesses quickly. While trending terms like remote teams and AI tools seem to have dominated our feeds recently, virtual resources have been fixing scalability issues for a lot longer than we think, and becoming increasingly relevant for companies tackling soaring costs.
A game of profitability and burn rates: The economic challenges of 2023
While businesses globally are contending with an array of economic challenges this year, the atmosphere can be summed up with 3 common themes:
- Uncertain market conditions
- Rising operational costs
- Limited access to capital and funding
Not since the energy crisis of the 70’s have businesses found themselves scrambling to merely survive in these harsh conditions.
Australia
The high level of consumer spending seen over the last 2 years is drying out, while the cost of doing business, (including rent, utilities, and wages) continues to rise. In Australia, many business owners are experiencing enormous strain to maintain profitability while managing burn rates effectively. This is especially true of start-ups and small businesses that rely on investor funding and financial services to sustain growth.
Many have already succumbed. The Australian Securities and Investments Commission reported 828 insolvencies in March 2023 - an increase of 78.45% from March 2022 (464). In June 2023, the Australian Financial Review noted that business collapses have hit the highest monthly level in more than seven years.
Globally
Outside Australia, businesses are grappling with similar economic challenges. While supply disruptions and changes in consumer behaviour have been observed, inflation and geopolitical instability top the list of perceived risks to growth. According to the latest McKinsey Global Economic Survey (June 2023), 35% of respondents cite inflation as a risk to economic growth in their country, while 34% flag geopolitical instability and conflict.
While the numbers may seem sombre, overall sentiment is higher than it’s been in the past year, with 48% of the survey respondents stating economic conditions at home have improved in the past six months (up from 40% last quarter).
The need for financial prudence and sustainable business models has never been more critical on a global scale. Start-ups and small businesses, in particular, face the uphill battle of securing funding, managing operational expenses, and achieving profitability in a highly competitive market.
Past solutions for modern problems
The challenges of the 70’s economy are not dissimilar to the ones we see today. Increased fuel costs were wreaking havoc around the globe with commuter prices taking a huge hit and businesses struggling to cope. So how did they do it?
Efficiency was plummeting and the hope of profitability bleak when an innovative idea emerged that combined technological advancements with operational requirements - the age of “teleworking” was born.
The prototype for modern ‘remote work’, teleworking grew rapidly through the 21st century, with new technologies improving communication and automating arduous processes. The result was lower margins of error and increasing cost efficiencies.
Globally, 16% of companies had adapted all-remote teams by 2017, while 48% of full-time employees had remote jobs by 2022.
Fast forward to 2023 and remote work is seeing a resurgence beyond what COVID necessitated, with companies recognising the benefits of cost effective operations and tapping into a diverse talent pool, regardless of geographical boundaries.
The increasing adoption of remote teams continues to challenge the traditional notions of the workplace, with an estimated 33.5% of the global workforce either working from home or part of a hybrid work model in the first quarter of 2023.
Predictably, technology is also fast adapting to meet the needs of a changing landscape. AI tools are making waves across all industries and businesses are leveraging them to optimise supply chains, personalise customer experiences, and improve product development.
To survive and thrive in this economic climate, business owners are faced with making tough decisions. Cost-cutting measures, streamlining operations, and optimising resources have become essential strategies to stay afloat. However, striking the right balance between cost-cutting and maintaining quality products and services remains a delicate act.
The future of start-up growth strategy: Remote teams, AI and communication tech
The Australian business landscape and the global economy both face similar hardships, they also share common opportunities for growth and transformation. While a majority of the workforce cannot work remotely due to the nature of their jobs, up to 25% in advanced economies and 15% in developing economies can do so 3 to 5 days a week without productivity loss.
In fact, 62% of employees say they feel more productive when working remotely, with hybrid workers saving $19.11 each day when working from home rather than at the office. Moreover, research has consistently shown that companies with remote work policies experience a 29% increase in productivity and 25% lower turnover rates.
The advantages of remote work extend beyond employees, as businesses that embrace this model have seen tangible impacts on their bottom line. A Stanford survey found that companies offering remote work options experience an average increase of $2,000 in profit per remote worker. In Australia, case studies have shown tech businesses cutting development costs up to 60% by investing in global teams.
The strategic utilisation of AI, coupled with the agility of remote working, has proven a game changer. Fully distributed companies take 33% less time to hire a new employee while 25% of companies that adopted AI, directly attribute at least 5% of their EBIT (earnings before interest and taxes) to the technology.
Remote teams are the inevitable future of growth strategy across many industries, with AI and communication tech helping bridge the gaps between time zones and workflows, becoming the foundation for success in an increasingly competitive and interconnected market. By embracing the potential of global teams, businesses can start to proactively shape their growth trajectories, and companies can stay agile and relevant in the face of future challenges.
