DO's AND DON'Ts FOR A STARTUP DURING THE PANDEMIC
The spread of the coronavirus, across the world, has upended the established order of things. Countries have been under lockdown and industries are struggling.
The startup ecosystem in India has moved to the zone of “status quo” in various sectors and investment being the prime focus. According to the current scenario the slowdown in economy will lead to a loss of about $1 trillion for the entire globe. Companies like Google, Zoom, Microsoft are the ones which have been positively affected by this pandemic. On the other hand, the companies based on manufacturing like Apple are facing huge loses since their primary components are found in China.
Here are some do’s and don’ts which all the startups and businesses should go through to help themselves cope up during such situations.
The utmost important thing is to keep your employees safe.
Then what? Or what next? You might encounter these questions.
Here's few things that you need to keep track of -
First, how much time your company has before it runs out of cash, also called run away and second how much monthly cash your company has before it starts generating its own income, also called burn rate.
The startup needs to make sure that it has a positive cash flow where you are making more money compared what you are spending. You need to calculate your runaway until you raise your next round of funding or just cut down your burn rate in this pandemic environment. Don’t wait for the market to turn around because previous globe spanning epidemics have taken 12-18 months to fully shake out.
If there is any deal at the table which can be either on acquisition or a venture financing, grab it. It is time to go on the offence in terms of closing any deal that will facilitate your business’ long-term survival. You should start grinding on your revenue.
If you are still stuck with the same business model today which you had a few months back then you are in denial. Quickly test your assumptions about your customers, their requirements and revenue. If your startup is B2B check whether your customer sales have dropped or not? Are your customers closing for the next few weeks? If so, make your business model accordingly to meet the needs.
If you could manage to convince your team regarding the reduce in their salary for some months can also help the company during the crisis. If you are a product based company, then you can start taking pre-orders or delivery services and start taking online payments.
You also need to review your insurance. Every startup should make sure that they put their basic coverage in place. If they already have insurance, they should review other policies. After reviewing your policies, it is time to review your supplier agreement, lease agreement and other agreement that might be costing you a lot of money and which you might be better without. Review your contracts and if not required either jettison them or approach the counter-parties and try to restructure the deals.
If you are the boss, it is your responsibility to send important messages and guidelines to the employees. Also, “What you say” is most important and could make a difference. Also hearing from a CEO positively, impacts brand perception. You can use social media handles to encourage employees to work from home, reassure your customers and support your colleagues that you are there for them and for your business. False hopes can put you in a trap and prevent you from making bold decisions for your company. “Humanity is the greatest asset in this tenuous time”, so take this opportunity, to communicate daily with your employees and help them deal their problems.
Many government organizations are taking protective measures to help their citizens and startups, by delaying the dates of paying taxes. Be a better version,be optimistic, establish a remote work option, and come up with some unique online strategies.
These are a few guidelines which might help you in this crucial time. All these might vary widely on when coronavirus will diminish. If you are the founder of the company, you must take all the safety measures for your employees and customers to save your venture in this tough situation.