The year 2020 had a rough start. Bush fires, plane crash, flooding, an icon who lost his life on a tragic accident, and a significant outbreak of pandemic disease has spread throughout the world and affected a lot of people and companies.
As the days go by, numbers of those affected by the Corona Virus are still going up. There are already about 5.6 million cases reported around the world and affecting 213 countries and territories.
As the pandemic virus continues to spread, preventive measures were placed. Several countries like Italy have imposed a total lockdown for two months after the first major outbreak in the country while some have declared emergency status in places with reported cases, therefore, disrupting the normal flow of the economy and making the stock market plunge.
In China, which was the epicentre of the outbreak, the economy is struggling to get back on its feet after imposing a total lockdown for months. According to the Chinese government, the economy will not achieve its economic growth target for the first time in years after 1990.
Enterprises have already made assumptions on the effect of the outbreak in their numbers. Apple reported that they could not meet the projected revenues due this year. JPMorgan Global Manufacturing PMI’s new export orders saw the lowest plunge since 2009 while production plummeted down as well. Experts are expecting that recession in the world’s economy can cost around $82 trillion.
As the affected number of lives by the pandemic virus continue to rise each day, and the global economy continues to decline, how will these implicate to tech startups? As a young and budding company, startups are quite vulnerable to these kinds of ordeal.
Startups are operating in lean structures, and the decrease in staff who are doing cross-functional roles because of the implemented preventive measures can create aberration in the operation of the company. Supply chains of either goods or services have also been put to a halt and established supply chain bottlenecks, which made it harder for company startups to compete.
Surprisingly though, as Italy imposed a total lockdown and a lot of the number of Italian businesses feeling the pain and facing downfall, tech startups are thriving. They are adjusting well to the disruption. An officer of a startup tech company said that their company is very used to two things, working remotely and video conferences, making it easier for them to adjust to the new situation.
For tech startups in the country like Italy that have adopted virtual working scheme since the foundation of their companies, the impact was negligible. Doing remote-working style from the start, communication for startup companies are still on for employees and always find it possible to work at home or any place where they need to be.
Aside from face – to – face meeting cancellations, tech startups companies’ founders and officers noted that nothing much had changed.6
Physical attributed products
Not all tech startups can enjoy the premises of smart working or work remotely. Budding businesses that need physical movements are feeling the crunch of the pandemic effect. Startups whose products are mainly physical are having a hard time as people are waiting to be able to move before they make any transaction.
Italy is known to be a tourist destination country, and some tech startups are in the travel industry. These sectors felt some of the worst punch in this ongoing crisis.
Founder of a tourism startup tech company, Sweetguest, noted that their business fell 60% just after a few days of the lockdown. Tourist bookings have been cancelled, museums and cathedrals are closed, and there are no upcoming bookings in the coming months.
With these scenarios, how can different tech startups survive during the Coronavirus outbreak?
Let’s move into deeper to explore the solution on this very contextual issue:
1. Strategize operation setup
Either your employees have been trained to work remotely or will just start to adopt this kind of working scheme, it is crucial to prepare a clear and proper virtual workplace and workflow. Establish communication pathways that will ensure easy access to everyone and metrics for productivity. Clear out priorities for deliverables.
Cross-train your employees to make sure that workflow will still be seamless should there be staff deficits.
2. Protect your employees
Your investors may be the bloodline to help your company survive, but it is your employees who can make this work. Your employees are your asset. As your company is just starting, each of your employees has a vital role in your business to keep it going.
Failing to protect your employees from this pandemic may result in adverse health consequences for you and your business. Implement policies that can give your employees more time to take of themselves like cancellation of face to face meetings, financial assistance, paid sick level and shift to smart working.
3. Have cash reserves
At the time being, investors will be skittish to throw millions and billions of dollars to any company. With the ongoing crisis, no one can determine what will happen to Q3 or Q4 of this year. It is better to have cash reserves that will help you survive in these troubling times.
You should have at least 12-month worth of cash reserves. Review and cut your expenses. Let go of an expensive office or a dead weight on the team. Don’t be afraid to make the call to ensure that your startup business will stay afloat in this crisis.
4. Close all your deals now
If you have any ongoing deal on the table as of the moment, now is the best time to close it. Whether it is a venture financing or an acquisition, close the deal now. Investors are rummaging a lot of things right now, even the most basic instinct of survival.
They may be hoarding the groceries for the next few years of living in isolation should this pandemic worsen or securing an area to hole up for bunkers and they are not thinking about you.
It is the time to make sure you close any commercial transaction that will ensure the survival of your company and make a return to any of your investments. However, do not fully expect your pipelines to materialize as everyone, including your investors, will go into survival mode.
5. Review your insurance
Your insurance might not cover crises like the Coronavirus outbreak, but you can always review your policies. You might find coverage in some places, and you might manage to uncover a policy that might cover this type of pandemic crisis. Reach out and seek out help from a counsel to make sure your claim can be a success.
6. Check out opportunities
The world is now gearing towards its new normal. As a startup company, if you can juice out a way or shift your business operations that can help with this new normal, be prepared to do so. Malls are closed, and people are staying at home doing online a lot. Though this seemed to be one of the most trying times for businesses worldwide, there are still opportunities for you and your business. If you offer online business
In Italy, a startup online groceries delivery business called Supermercato24 has been on the rise during this crisis. It has helped Italians who are too afraid to go out for their grocery shopping and other essentials to have food in their tables. To extend their services, they offer free delivery to those who people who cannot leave their homes.
Even just a single app that can encourage and help people with this new standard can go a long way. It may help people cope up faster and
7. Downsize your workforce
This tip can be the hardest thing you have to do at this very trying time. Letting go of someone during this pandemic can be heartless; however, survival for your startup is the most important thing these days.
For companies to survive, salaries will have to be slashed. You can also cut your marketing and sales spend as it will not even be the right time to promote your business. Unless you offer delivery services or online grocery stores, you can do any of your promotional activities once things have returned to normal.
8. Time for a new business model
After this is all over, no one can say if everything will return to normal as it used to be before this pandemic struck. The business model you have created may not be applicable this time or may not be applicable at all anymore.
The assumptions you have made may be no longer valid. Once abled, quickly test your past hypotheses and make necessary adjustments. Check on your clients and how they adapted to this situation. Keep tabs on the latest revenue forecast. Learn about the new financial metrics to help you cope up with the current situation. Also, do not forget to track and monitor your cash reserves so you’ll know when to tighten your reins.
This pandemic outbreak isn’t the world’s first recession, and definitely, it will not be the last. You may just be starting a tech business, or you have been trading in the waters for a little time now when this crisis began to take a toll on the world, but it is never too late to plan.
The key is to keep your cool, do not panic (and do not do something stupid), be firm and adopt a clear plan as you steer your company in this troubling times for the next few months or even years to come.
Ramon has been writing about technology trends, entertainment, and gaming ever since he left the busy world of corporate HR Tech behind. He currently writes about software and user experiences for Softvire Australia – the leading software e-Commerce company in Australia and Softvire New Zealand. In his spare time, Ramon writes science fiction, collects little yellow men and plastic spaceships.