What Entrepreneurs Should Keep In Mind As They Navigate Their Startups Through The COVID-19 Crisis
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The COVID-19 pandemic is creating a global economic effect on the financial market, meaning that the human and societal impact of this outbreak will be extreme, even though we may still be only at the early stage of this crisis. For startups, this will be a particularly difficult time, although some say that great companies are often created during market downturns. But of course, this is easier said than done- here are my thoughts on what entrepreneurs need to keep in mind during this period:
1. Forget about raising funds Angel investors may continue to invest, but expect this to be done at smaller rounds, lower evaluations, and in startups that may not require large amounts of capital. While venture capitalists and angel investors might have the cash to invest, the crisis will trigger a triage mode where investments will be made into selective companies. If the COVID-19 crisis comes to an end soon, startups will still have to add a few months of minimal investments before they can get back on their feet. I firmly believe that startups must communicate with their investors and employees and provide transparency about the true impact on the business. Honesty will get you the visibility you need to survive.
2. Cash-in and survive Startups generally disappear because they run out of financiers- not ideas. With that said, businesses must have an aggressive plan in place early on how to conserve capital. Even if the crisis is resolved, the chaos left in its wake may continue. It is time to put aside all the plans to scale and rethink all of that, as none of this will matter if you don’t survive. Have an extensive contingency plan around your budget and projections- you are now in survival mode.
3. Yes, surviving is the most important thing Many startups will have to stick to the bare minimum and essentials. Salaries may need to be revised for the company to survive, and also cut marketing and sales spending in half until your customers are back at work and able to consume again. Any cuts you make now will have a lasting impact on the cash balance later.
4. Stay open to new opportunities If you can think of ways to shift some aspects of your business to contribute to combating COVID-19 or even helping people deal with the current situation, then prepare yourself to do so. Despite the crisis, there are still some opportunities, especially for businesses that sell products and services directly to consumers. If you are selling something that will make their lives easier during this difficult time, then these are new opportunities for you. Equally, any product or service that makes working from home easier will have a ready market.
5. Reflect It is hard to know how the country and the market will look like in a few months, but if you allow your startup to remain resilient in such difficult times, then there will be great opportunities. It is time to find your silver lining- at the end of the day, you are the most important asset you need to readjust and continue building your dream business.