Let’s embrace the hard truth: the COVID-19 pandemic is going to stress-test startups.
Now, I could have sugar-coated it and used a bit more optimistic words as the first line.
But that can send a false message. Some may take this lightly and ignore or delay to take actions proactively.
We don’t want that.
We want you to take ACTIONS.
Not next week, not tomorrow, but TODAY.
We have big dreams for our business. And when there’s something that can impact it profusely, we take that seriously. With 150,569 reported cases and 5,618 deaths worldwide as we speak, Coronavirus has already proven consequential.
So we need to be fully prepared and take preventive measures.
There can be a range of scenarios with a potential Coronavirus outbreak in Bangladesh.
On one spectrum, Corona may not spread that much here. This is the best case we can now hope and pray for. Nevertheless, we will have a huge impact, of course, considering the global situation and impact on the economy.
On the other spectrum, we may be affected like Italy, which led to a whole-country lockdown. This directly impacts everything and all of us. This is the worst case.
We need to hope for the best but prepare for the worst.
A startup is much more susceptible to turmoils like this. Large, stable companies normally have better resources to handle an emergency. They have some cushion to cover the losses, backups to get up and keep running.
But it’s not the same for startups. All the startups are severely constrained on resources. A few weeks or months of dry season can put startups in immense danger, let alone a critical crisis. We have seen numerous promising startups fall through the crack during the Internet Bubble in 2001 and the Global Recession in 2009.
An epidemiological threat such as coronavirus can have disruptive effects on the economy. It can disrupt the supply of goods, reduce consumer demand due to a decrease in buying capability, facility closure, supply chain dysfunction, decrease staff productivity, etc. And I am not even talking about the health issue and deaths here at all.
On top of that, the startup ecosystem in Bangladesh is at its very early stage, and we don’t have the capacity or experience to handle a disaster like that.
On the few positive sides:
The advantages, however, are minuscule in comparison to the challenges. As a leader, you need to make the most out of the leverages. Instead of panicking, keeping a cool head and chalk out detailed plans is what you need. And this is what I will try to cover in this article.
Last few days, I have talked with personnel from different companies about how they are preparing against the potential crisis. These include from Startups to MNCs, Private companies, NGOs and Educational Institutions, Local and Foreign organizations that deal with Fortune 500 Companies, etc. In this article, I will share the valuable insights I gathered from them, the actions and preparations, as well as my own suggestions.
Please note that there’s no magical solution that fits all in this unpredictable condition. What works with one company may not work with yours. Consider this as a guideline you can quickly pick and then improvise per your need.
I am going to repeat this again - In the case of the mass outbreak of Corona in Bangladesh, one should give the highest priority on survival during the pandemic.
This is about the mindset.
Now, this doesn’t imply that the effect of corona will necessarily hurt business growth or productivity. Some may have a positive impact somehow. But considering the global state of affairs, I would like to emphasize on giving priority on surviving than thinking of your month to month growth or highest productivity at this point. Once you have everything in your control again, shoot for the next.
Keeping that in mind, I have prepared “Coronavirus Contingency Planning for Startups” which you can use to be better prepared for the crisis.
This contingency plan is a proactive strategy for startups, and different from a crisis management plan which is more reactive. The plan includes primarily 5 strategies and several courses of action that you can follow.
Besides, I have created a “Coronavirus Survival Guide Checklist” from Idean Consulting that you can download and use.
1. Risk Assessment and Actions
In the beginning, work with the leaders and managers to devise a Risk Assessment and Actions plan. The use of colors allows a faster assessment of the levels of risk involved.
Ellis Miller, Founder and Managing Director of CodeCrafters International, has created a document that outlines our company’s contingency plan with a goal of protecting employees, families, and the broader community while ensuring business continuity. This document is made public to help others, you can take a look and customize according to your need.
Stages of Risk
|GREEN||Prevention Preparation (Only a few cases of Corona)|
|YELLOW||Caution (Low number of cases)|
|ORANGE||Moderate Risk (Moderate number of cases)|
|RED||Significant Risk (A large number of cases with community transmission)|
Once you have created the Risk Assessment and Action plans, establish a ‘Response Team’ with 2-3 members of your team who will further work on this.
Standard Preventive Measures: These are the basics of how to take preventive measures and stay safe from Corona. There are several authentic sources on this, yet it’s surprising how so many of us still don’t follow those.
Create a “Standard Preventive Measures plan”, print it and place one visible place everywhere in your office. This needs to include - when and how then need to wash hands, avoiding handshakes in office, staying at home if there’s even slightest symptom, etc.
While discussing with Mr. Raisul Kabir, the CEO of Brainstation-23, he mentioned that BrainStation has already taken preventive measurements. For example, if someone has family members coming from abroad, stay home for 14 days, preparing for home office with VPN and stuff, making sure everyone has a good internet connection at home, hand sanitizers ready at doors so that people can clean themselves before entering office, etc.
You can also follow these and communicate with all to make sure they strictly follow the safety measurements in office, home and everywhere. Here you can check WHO’s Advice for Public, Workplace Preparation, Hand-washing Steps Video and refer to others.
2. Virtual Workplace Protocol
Since Corona has viral nature, in case of huge spread out in Bangladesh, you will have to either consider working from home or will be forced to do so. In places like Italy, the virus spread just in one week, and they didn’t have much time to be prepared.
That’s why you need to create a Virtual Workplace Protocol as soon as you can.
I have received multiple emails from our US partner, who works with several Fortune 500 companies, regarding how to prepare to work from Home. The mails were detailed and covered almost all angles. And I suggest you do the same.
The Virtual Workplace Protocol can include these points:
And once you have the protocol ready, try to ‘Run a Drill’ by asking everyone to work from the office on a specific day.
3. Stakeholders Management
4. Financial Contingency Plan
There’s the quote floating around - “Coronavirus will bankrupt more people than it kills”.
As I already mentioned above, due to the resource constraint nature of startups, the financial impact on the business can be drastic.
A financial contingency plan should document your course of action in times of crisis that threaten the stability of your company. It should focus on resource and financial allocations in particular.
[You can use the “Coronavirus Survival Guide Checklist” to determine if you are following all of the necessary strategies and actions plans and stay fully prepared for the crisis moment]
1. Identify Major Revenue Sources:
If you can’t run on a full scale, which are the core functions you can keep moving and generate revenue so that you can cover the operations expenses and salaries? Is there an opportunity to diversify the sources?
Review your sales forecast. You may not immediately be able to forecast due to the turmoil, but it’s important you try to predict each and every impact on your sales and marketing.
2. Be Brutal in Cutting Unnecessary Expenses:
Stay Lean. Take the strict measures and cut down spending you can avoid right now. Only spend where you have maximum return on investment now, and reduce cost everywhere else.
3. Rethink Capital Expenditure and Investments
You may have some funds kept aside for capital expenditure, raw materials, inventory, etc. Now you may have enough funds, but in the coming days, there can be a shortage of funds and investments. So think carefully which one is a necessity for you now.
4. Risk and Opportunity Management
Identify what are the different ways a corona crisis can negatively impact your business. Then try to figure out how you can mitigate those risks from your business.
Now brainstorm with your team and try to figure out if there are potential opportunities that you can use. Have an innovative strategy to respond to the risks and grab the opportunities as you go through this.
5. Cash Runways
Cut your burn rate. Now.
Previous globe-spanning epidemics have taken 12 to 18 months to fully shake out. So prioritize on surviving than growing, and thus revise your revenue earning and growth plan if needed.
What was your estimated runway before the disease started to spread? If you need to make the Runway 2X or 3X, how can you do that?
6. Fundraising Alternatives
If you are in the stage of raising investments from Angel or VCs, think forward several months. Since the global economy is collapsing, it can become very difficult to raise the next round of your investment. Sequoia’s “Black Swan” post already has enough hints for us on that.
Think in that case, how can you still keep moving? Can you reserve some extra cash now? Identify what are alternative funding opportunities. And don’t be late in the race, reach out to people who may help you out financially in the coming days.
5. Psychological Safety
A global pandemic like COVID-19 is a unique unfortunate event our generation is witnessing. It will have a long term impact, not only on the economy but on psychology as well. The time will be tough for founders, for employees, for investors, for each and everyone in the world.
Protect Your Employees.
Do whatever you need to do to keep morale up in your company. Be transparent, encourage to take extra leave with the slightest symptom of sickness, keep close communication with everyone.
Manage your own stress. Share your problems with family and friends, with close ones and try to release stress. What happens, happens to many of us, none of us is facing the situation alone.
Just Do It!
If I had a wish, I would ask so that none of the above concerns come true at all. But this is the real world, we need to face it. We need to face it today.
And the best part? We are together into this.
Surviving coronavirus can make the immune systems of our startups stronger. This can be the beginning of a new era.
Let’s stand strong together in the crisis moment. Let’s support each other in the fight against coronavirus. Let’s extend our helping hands and survive this global phenomenon.
Please share your thoughts and plans so that everyone can be beneficial. And feel free to reach out to me on LinkedIn if you want to discuss anything.
Resources mentioned in this article