How to navigate your small business through the current crisis
We are in the midst of a global crisis. COVID-19 is having an effect on companies all over the world, including startups. Even before the crisis, startups faced fundamental challenges such as value concentration in a few cities, a lack of inclusion, and the failure of tech giants such as WeWork and Softbank. The pandemic's unanticipated arrival has resulted in a significant drop in market demand and venture capital, resulting in layoffs. Employees with equity in a startup are understandably worried about the implications for their future, which is why we've put together a guide to assist you in navigating these turbulent times and maximizing the value of your choices.
How COVID-19 is impacting the startup economy
In the first three months of 2020, VC funding dropped 20% globally, while it fell 50% in China. According to the survey, 72 percent of the world's startups have seen their sales fall since the recession began, with an average decline of 32 percent. Just 12% of all startups saw substantial sales growth, while 40% of all startups saw a 40% drop in revenue or more.
This infographic focuses on a few of the startup sectors that were the hardest hit by the survey, with Travel & Tourism seeing a 70% drop in revenue.This infographic focuses on a few of the startup sectors that were the hardest hit by the study, including Travel & Tourism, which saw a 70% decrease in sales.
Tip 1: Maximize your equity
FINANCES AND INVESTORS
The private equity and venture capital markets have been severely affected as a result of the stock market downturn. During 2020, there will be a significant drop in startup valuations as well as total rounds earned. The demand for investment and the availability of funds have both decreased, and this trend is expected to continue. Investors have either pooled their capital to concentrate on their current portfolio and maintain its sustainability, or they have sold their current shares at a loss to avoid further financial harm.
On the other hand, there are a few outliers with discretionary funds who are diversifying and expanding their investment portfolio by taking advantage of below-market rates. However, relying on external capital is not a good idea, as all economies are in a state of flux. Focusing on internal capital and capabilities will be the perfect option.
PARTNERSHIPS AND ALLIANCES
The outbreak's global consequences have brought people and companies more together than ever before, making now the perfect time to move away from conventional funding and into collaborations and alliances. The demand trends in the industry have been thrown off, with extreme drops in some groups and an upward increase in others. As a result, SMEs must form complementary alliances by leveraging each other's resources and strengths in order to turn into a stronger organization that can respond quickly to market demands. This will help them survive commercially by using limited resources, as well as serve their communities and generate positive publicity.
Tip 2: Manage the business models
RE-EVALUATING THE EXISTING BUSINESS MODEL
Instead of focusing on the crisis anxiety, entrepreneurs should re-evaluate their propositions and business models. Given their line of business (primarily B2C and digital), a number of SMEs have been less affected, or in some cases, have enjoyed higher earnings, despite the current crisis. It is, however, normal to need to revise and redo old plans, as well as build new ones.
Businesses may do so by studying market demand trends, detecting changes in customer behavior, and identifying potential holes and opportunities for them to exploit and profit from. They must update their sales targets and product schedules, develop a new business model with a corresponding operating plan, and maintain transparent and consistent contact with the market and investors.
IMPROVED AND NEW PROPOSITIONS
Entrepreneurs are then encouraged to look for fresh and creative, often radical, ways to attract new consumers and provide additional value to the market. This can be accomplished by reorganizing internal resources and skills to fine-tune and tailor existing programs, as well as developing new lines of products to meet current demand. As previously reported, forming alliances and collaborating with other SMEs would assist in adapting to emerging business conditions and laying the groundwork for future long-term partnerships.
GO-TO-MARKET STRATEGY DEVELOPMENT AND COMMUNICATIONS
It's time to build the go-to-market strategy, as well as the related marketing plans and contact platforms, once the newly adapted propositions have been developed. Communication should be at the forefront of every entrepreneur's strategy in times of crisis in order to maintain a consistent and truthful stream of messages with their market.
Keep in mind that your efforts can all contribute to improved reputation and fundability—not it's about who survives the most, but who survives the longest. It's not all about maintaining liquidity and business offers that you're adaptable.
From a people, method, and technology standpoint, the right enablers must be in place for your company to thrive and potentially expand.
Tip 3: Focus on safety and engagement
It is vital to think about how to support health, wellness and employee engagement while it is in crisis. For many weeks, several of our startups have been working from home. Others have seen a 15-20 percent rise in productivity, and others have seen a 15-20 percent decrease. The motto is to provide the right resources to the teams, establish regular rhythms to ensure smooth operations, set daily or weekly targets, and most importantly, communicate, communicate, communicate.
It's important to engage the staff on a regular basis and with empathy. People find it difficult to adapt to working from home when they are concerned about their family's health and unsure how to handle life in a lockdown situation. Establish a daily schedule for team video calls and check in on how team members are doing both personally and professionally on a regular basis.
This is unlike any other financial crisis in recent memory. Tough times, on the other hand, can bring out the best in you, your leadership team, and your business, bringing teams closer together and driving clarity in the mission and vision of a startup.