We had the opportunity to work with a group that had an ambitious plan to buy the south end of a town that sees 2.8 million visitors a year. As of this writing, we do not know if the client will decide to move forward with the $50 million estimated cost of purchase and improvements. What we do know is that if the group moves forward, the research we did on Macroeconomics and the state of the US Economy is what persuaded them to have us do a feasibility study and consider moving forward. Note, the information below is not the study we did for our client, but the preliminary overview we did that impressed them to invest in the study. If questions arise after reading this information, reach out and talk to me about your project and the next steps.

Wishing you and your dream a successful beginning, middle, and end.

Macroeconomic Trends Today

Understanding The Impact of Macroeconomic Trends

Goal: raising money for business growth and stability

Investor sentiment is determined by the perception of market conditions and its ebb and flow.

Upcoming trends such as industry-specific developments, customer buying trends, and regulatory updates can influence startup valuations.

VC Investing:

  • Dropped by 30% in 2022
  • Dropped by 40% in 2023
  • Startup funding dropped to $140 billion
  • Money sitting on the sideline is suggested to be $317 billion

Reasons for the drop in funding: High inflation, market instability, interest rate hikes, and federal reserve rate increases.

2024 saw conditions improve, interest rates being cut, a reduction in inflation, and stable markets. 93% of CEOs have expressed interest in hiking or maintaining corporate venture funding, resulting in an increase in fundraising and merger and acquisition activity.

Note: Uncertain conditions can shake investors’ confidence.

  • Symptoms: Higher interest rates and inflation, which leads to less access to capital.

Market Stability & Economic Growth

  • Demand for products and services
  • Risk factors drop, creating potential for bigger returns
  • Opportunity to grow market share

Look for stringent screening processes and due diligence during the process.

Industry Trends that attract Investors

  • Groups that develop innovative products
  • Products that attract customer attention
  • Products that can scale quickly

Examples of trends today

  • Healthy pet food
  • Products that mimic meat but provide the same nutritional value
  • Awareness of green products
  • Products that minimize waste and resource usage

Note: Investors will scrutinize business plans and check for compliance that indicate long term adaptability. If these outcomes test well, it will lead to higher valuation and investor support.

Worldwide Economic Trends Investors look at

  • Ukraine-Russian war
  • Consumer purchasing
  • Spending behaviors
  • New innovations
  • Technology impact
  • Changing government
  • Regulatory policies
  • Social structures
  • Trade policies
  • Border tensions
  • Political events
  • Currency inflation
  • Tariffs

All these factors influence decisions

Federal interest rates

  • Lower interest rates = investors being more inclined to deploy capital and support startups, even if the risk is higher.
    • Funding is more available to groups that demonstrate the potential for high growth over long and short term
    • Higher rates mean less risk adverse, more stringent screening, leading to valuations and fund-raising capital drying up

Unemployment

  • High unemployment
  • Low wage growth

Equals a favorable environment for startup funding. Low unemployment and high wage growth create the opposite effect.

Navigating the Macroeconomic Trends on a Startup

  • Consistency
  • Build long-term relationships
  • Earn loyalty and confidence
  • Outset Goal – build long term partnerships with the same investors
  • Look for investors that share your vision and mission and will support your brand in good and bad times
  • Provide constant updates to your investors through reports and metrics of wins-losses
  • Reach out for feedback and direction to help manage difficult trends
  • Constant involvement will give investor insights into company resilience and propensity to deal with potential downturns
  • After sale follow up with customers to share with investors

The outcome goal with investors is to build loyalty and confidence in the business and its senior staff acumen, along with giving the company a better chance for consistent sales, revenues, profits, and creating a stable business.

If you liked this article and would like to talk more about your venture and dreams Lou can be contacted at 503-709-3742 or quint@healthclubmanagement.com

Sources:

  1. US Data Service
  2. Partners-Advisors
  3. Manufacturing Inc.
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