How to Deal with the New Normal
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Over the last few weeks, numerous start-ups founders have called/Skype-d/Zoom-ed to share their concerns caused by the current health crisis and economic disruptions; their anxiety and vulnerability have been evident in their questions: How much would revenues drop in the coming quarter/year? Will I take a hit on profitability? Should I let go of my people? My first response is fixed– please do what you need to keep yourself and others around you safe and healthy. Beyond that, I have struggled to come up with precise answers because there is so much ambiguity in the environment and this is such an unprecedented situation.
On the business side, the common themes in our discussions have been:
Empathy And Focus: There are so many unknowns in the current situation – both in the macro-environment and in the operations of each company. The global pandemic will test your resolve and push you to your limits in human and business terms like you never could have imagined. Founders, in general, are quite adept at dealing with information-gaps, risks, and putting-out daily fires. But it has hard to be prepared for the scale of Australia’s 2019 bush fires. These are times to hone your skills of empathy and decision-making. Empathy in understanding your employee’s context, your supplier’s worries and your customer’s pain, all from a humane and well-being perspective. Founders must rely on the available, perhaps incomplete, data and apply their best judgment to make decisions that will impact lives. The best time to build, and test, one’s character is sure during adversity. Stay focused within your circle of influence and stay positive as the responsibilities have a broader scope. You must take care of not just yourself and your family but a larger community of people. It is a good idea to bounce your thoughts and decisions with some well-meaning friends/mentors but be prepared to take and implement some hard decisions.
Cash Is King, Again: Growth for growth’s sake was anyway going out of favour, now it is completely out of question. Well and hard-earned profits will become the fuel to propel start-ups forward. While debt and equity-financing will continue to be available, over-reliance on them will become riskier. In these times, revisit your costs (“do you really need that office in central Delhi or that fancy design studio’s marketing services?”). Remember that landlords, suppliers and partners will be more than willing to have a reasonable conversation with you as you try to negotiate terms. Once you sharply project your revenues/costs/receivables/payables – you will have better clarity on your cash flows. Do whatever is in your (ethical) powers to generate more cash from operations and to reduce the burn-rate dramatically.
Get Closer To Your Customers: Consumers and enterprises around the world are worried, unsure and anxious. For start-ups with an existing base of customers, this is the opportunity to show that you care. Not to sell more, but to reach out with a kind word and a good ear. In doing so, you will strengthen your relationship with the customers, understand their concerns, make adjustments in your products/services and who knows, maybe even discover some new needs of theirs as a business opportunity.
Involve Your Employees: In your journey of transforming your idea into a world-changing force as a founder, you would have already realized that getting the right people is supercritical-people who align with your mission and bring their passion and capabilities to the workplace. In these times, please work on deepening the ties with your support structure. Listen to your team’s concerns, share your dilemmas, involve them in decision-making, and be transparent as you consider making tough decisions related to pay-cuts or letting-go. Your team is unlikely to like hard decisions but possibly understand them if you have been transparent. They will hate the same decision if it is handed down as a diktat. Hard times are also a reminder that if we, in better times, do not engage the hearts and minds of our people, we may not have their full support in times of crisis.
Work On Your Business: When was the last time you worked on your business? As founders, we are so busy moving the needle on an hourly/daily basis, that we often lose sight of the big picture. Moments like these are reminders for us to step back and challenge our assumptions/beliefs: Are we addressing the right gaps in the market? Are we truly delighting our customers? Does our business model need tweaking? Is this what we hope to get out of our lives? This is also an opportune moment to pay deeper attention to industry changes, policy announcements, social adjustments (“will work-from-home become the norm?”) and funding trends.
They say that when the going gets tough, the tough get going. In a few months from now, as you look back, hopefully, you will not just see the scars but also reminders of small business victories and personal triumphs. Lessons that will stay with you for the rest of your life.