Crisis Scale-up Advice From an Experienced COO: 'Test the Waters, Don't Put Your Eggs In One Basket'
The COVID-19 crisis has had an unprecedented impact—the economy is in turmoil, millions of people have found themselves unemployed, and the health and wellbeing of the global population is at risk.
We are likely to see a significant recession by the year’s end—a dire prospect for many—but as business leaders, we must strive to find the silver lining.
Some of the most successful businesses of our generation were born during recessions—take IBM, Disney, and Microsoft for example. Difficult times fuel the necessity to innovate. We are already seeing industry leaders pivot and respond to major challenges caused by this crisis. Electric car manufacturer Tesla is making ventilators to combat the global shortage, and the CEO of the media-sharing platform Pinterest has developed a mobile app for people to self-report virus symptoms.
Meanwhile, self-isolation measures have forced the majority of businesses to embrace digital transformation that might have taken a decade, within mere weeks.
Scaling through a crisis
Despite the sudden change in our economic landscape, the fundamentals around how to build a stable, profitable business have not changed.
Transitioning from a startup to a scaleup is a significant milestone for any business. It’s an indication that a company has found its product-market fit and can be profitable. Consistent growth and stability help a business remain robust when going global, but conquering one market does not guarantee success in another.
Scaling a business into new markets during regular economic conditions often means taking a leap of faith into the unknown, let alone approaching this process during volatile times. During a crisis, expansion is especially risky, so you need to be realistic about whether this is the right move for your company now.
If you deem the opportunity outweighs the risks, and if you have the right strategy, decision-making processes, support network, vision and structure, sustainable growth in global markets can lead to significant returns, from both a financial and reputational standpoint.
Despite the downturn, fintech companies are in an interesting position. The COVID-19-induced lockdown has dramatically shifted business models, meaning online offerings, especially ones that enable digital transformation, or platforms that offer financial benefits are likely to see an uptick in demand.
Consider what value your company brings during volatile times. For example, multi-asset trading platforms such as eToro have become attractive for people looking to learn a new skill and take advantage of bear markets. Buy now, pay later juggernaut Afterpay has seen online sales soar 97 per cent in recent months. With banks under pressure, struggling businesses are turning to lending alternatives such as invoice financing marketplace Crowdz for cashflow support. Similarly, at GoCardless, our focus has shifted towards helping customers, such as gyms and service providers pivot their offerings online, allowing them to continue trading despite enforced business closures.
You can’t control a crisis, but you can manage your reaction and adapt to change. Keep an agile mindset and always look for opportunities amid shifting global markets.
Test the waters before diving in
No business’ journey to successfully scaling will ever look the same—there’s no ‘copy and paste’ method. It’s a significant challenge for any leader, even those with experienced teams behind them.
Part of the challenge is the unknown—you can’t predict where your successful markets are until you’re there. To find out, you need to launch the product in as many markets as possible, but with limits on travel and export, be aware this may prove to be more difficult than usual.
To minimize risk, start with markets with low barriers to entry, especially those most similar to your own, and be conscious of limiting spending, operating lean, and keeping constant feedback loops open with customers.
By testing the waters with a minimum viable product that’s localized to suit each market, it will soon become clear which regions are the best fit for your product. If your business fails in one, note the reasons why learn, and move on, fast. If it thrives in another, you can start investing money with higher confidence.
Taking this approach means you have multiple opportunities for success, and more importantly, distributes the risk into smaller areas, to safeguard your business in the long run.
Of course, taking a business globally is not a one-size-fits-all approach. Factors such as time zones, culture, language, regulation, and product type present significant challenges unique to every company—more so now during the COVID-19 crisis than ever.
However, this doesn’t mean there aren’t opportunities available to grow, pivot, and engage with new markets, especially as consumer needs change. With the right pace, attitude, and people, expanding your horizons may be well worth the investment.