Opinion | Navigating your startup in these uncertain times
Startups, particularly early-stage companies, operate with a high leve of uncertainty during the normal course of business. COVID-19 is redefining what uncertainty means. Rajan Anandan shares some practical tips to help navigate the storm.
Published April 6, 2020
We are in the midst of a global crisis, which is unlike anything we have seen in the past 100 years. It’s impossible to gauge the full impact of covid-19 on the world and our economy. The only thing clear is that the situation around the world, and in India, will get much worse before it gets better.
While some startups in areas like edutech, online gaming, collaboration, food delivery or healthcare will see growth during this period, others will face difficult choices in the weeks and months ahead. Startups, particularly those in an early stage, operate with a high level of uncertainty during the normal course of business. Covid-19 is redefining what uncertainty means. Here are some practical tips that may help startup founders navigate the storm.
Focus on safety and engagement:
This is, above all, a health and humanitarian crisis, and the safety of yourself, your family and your team should be your top priority. As such, it’s vital to think about how to support health, wellness and employee engagement while everyone is working from home. Many of our startups have been working from home for several weeks now. Some have seen increase in productivity, while others have seen a drop of 15-20%. The mantra here is to enable the teams with the right tools, develop daily rhythms to ensure seamless operations, set daily or weekly goals and, most importantly, communicate, communicate and communicate. Engaging your employees, often and with empathy, is critical. It’s hard for people to adjust to working from home while they are worried about their family’s health and how to manage life under lockdown. Set up a regular cadence of team video calls and check in often on how team members are doing—both personally and professionally.
Plan for a range of ‘worst-case’ scenarios:
Sequoia Capital has published a covid matrix that helps founders map out different scenarios, based on how much runway they have, how long the lockdown might last and what impact they anticipate on demand/revenue. Hope is not a strategy. In times like this, decisive leaders are more likely to win. Map out all possible scenarios, come up with a strategy for each one and figure out how you can extend your runway in the most likely scenarios. Cash was always king, now more important than ever. If you have six months’ runway, try to extend it to 12 months; if you have 12 months, try to extend it to 18. Think about what you can cut, from marketing costs through to leases. In a time like this, there are no such things as fixed costs. The last area you should consider reducing is staff costs, because these are the people helping you build your dream. If you must address talent, talk with your team about a combination of options—pay cuts or deferrals, alternate working days, furloughs and reassigning roles—before reducing headcount. And if you must cut pay, lead from the front. Start with your own, then trim executive pay before others.
Focus on customer engagement:
Take this time to get even closer to your customers. If you are a fledgling direct-to-consumer brand with a small customer base, explore how you can engage customers—beyond advertising or sales—at a time when all of India is in lockdown and everyone is spending a lot of time online. Think of innovative ways in which you can connect with your users: gamification, online forums, or even asking customers to co-create new product lines. There’s many ways to invite consumers to interact with your brand and build deeper affinity. If your brand can give back to the community in some way, do that, too. It’s a great time to show empathy and to demonstrate to customers that you care. If you are a B2B company, take this time to understand what your customers’ priorities are. Consider changing your narrative to align with those needs. Most companies are thinking about cost reduction right now. If you can position your product or solution as one that can help reduce cost, this should be the focus of your messaging.
Double down on your product:
This is a good opportunity to build the “must-have” you have been waiting to add to your product, or think about how to engage new audiences. One of our early stage SaaS companies that focus on large enterprises in the US found that although these customers stopped taking their calls once covid-19 set in, there was a spike in demand from small businesses. They quickly tweaked their offering and reoriented their sales teams to better capture this new customer base. By staying close to the market, you may find new opportunities. Companies with an offline component are accelerating their digital transformation. Logistics may be mired right now, but that will be resolved soon. Covid-19 is a wake-up call for consumer companies without an e-commerce strategy.
This is not like any financial downturn we have seen in recent history. But tough times can bring out the best in you, your leadership team and your organization, bringing teams closer together and driving clarity in a startup’s mission and vision.