COVID-19 Response Strategy for Startups: 9 Ideas To Ensure Health of Your Business Amid Coronavirus Outbreak
At FS, we rely on advertising and content marketing solutions that we provide to companies to earn our bread and butter. As the coronavirus pandemic ravages through our economy and homes, a growing number of companies report drops in revenue and cut in projections. Our estimates suggest that our numbers will suffer in the coming weeks and months as more companies take a conservative approach to marketing and communication.
Suffering revenue losses and failing to meet your projections are not new to most founders. It happens. But this time around, it is different. None of us know when this will end. China has been able to contain the spread of the virus in about two months. The country is slowly opening up. Businesses are opening their doors. Operations are resuming. But for the rest of the world, it is just getting started. Europe is reeling from the spread of the virus. The content has become the new epicenter of the pandemic. The US has also been waking up to the reality of once in a 100-year pandemic and scrambling to cope with the rapid spread of the virus.
In Bangladesh, in all estimates and from the most optimistic viewpoint, the country appears to be terribly ill-prepared to deal with the crisis. The failure to contain the spread is likely to be devastating. It will overwhelm the public health care system and rack havoc the economy. Most importantly, it could linger the shutdown and sufferings if not contained early.
Some experts are suggesting that if not contained the pandemic hit could take as long as 18 months to slow down and come under control. If anything near that happens, it will destroy the economy and everything in between.
Founders, you should pay attention
This is something that worries us terribly at FS. For a lot of founders in Bangladesh, this appears to be the beginning of a terrible time.
The situation is particularly worrisome for founders because the Bangladesh market is outright hostile to early-stage businesses. Access to finance remains a challenge for most companies. In the midst of this pandemic and afterward, it is unlikely that a lot of founders will be able to raise money to survive through this. The support from the Government and other sources remain scarce until now.
To that end, it is important for founders to be mindful and think seriously about how they can ensure the health of their business through this pandemic.
This is what I have been trying to do in the last few weeks, apart from preparing my family for an effective social distancing.
Over the last few days, I have been trying to figure out a strategy for at least the next two quarters and how we may move forward at FS and reading up anything and everything that I can find on weathering a bad time.
Here are some ideas that I believe will be useful for dealing with this extraordinary time.
State of the union. With the growing fear over COVID-19, we have already seen a fall in business activities in the country. Shopping malls are getting closed. Transportations is being disrupted. Companies are shutting down offices and asking employees to work from home. The market is on a free fall.
Many companies have already reported a significant drop in revenue. Many are working on projections. The supply chain has greatly been affected.
Although China is slowly opening up, it is likely to take a few more months to normalize. Garments are seeing an acceleration of order cancellation causing panic across the board.
Travel has severely been curtailed. I have attended only one meeting in the last week. Companies are postponing activities at an accelerating pace.
Retail, manufacturing, consumer services, and travel are some of the sectors that are getting most affected.
The bad news is that we are just entering the crisis and we don’t know how long it would take to contain the virus and we return to a state of normalcy. There are and will be economic measures to contain the economic devastation but it appears to be a far greater challenge to contain the fall and we are likely to be hit by a global slow down. On top of that, Bangladesh has been going through economic anxiety of late and this shock may exacerbate the situation.
Founders should urgently spend time in thinking and on writing boards and devise a strategy to navigate this crisis.
A short guide to navigating coronavirus pandemic for founders
Here are some ideas I have compiled after reading a ton of materials on dealing with challenging times. I have added links to some excellent materials at the end of the article as well.
Don’t despair, hard times build great companies: If you are going to build a terrific company, your chance of doing so does not suffer due to hard times, – a financial crisis or a pandemic. In fact, many experts suggest that hard times give rise to the best companies. Some of the biggest successes in tech including Google, Amazon, and Paypal went through crises like dot com bust. However, this crisis is different. And it would be better if you prepare.
Lightweight operation: “The way to make a startup recession-proof,” says Paul Graham, “is to do exactly what you should do anyway: run it as cheaply as possible.” If you do only this during this time of trying, you should be okay. The rest of this article is partly about how to do it.
Pay attention to greater fiscal discipline: But in order to survive difficult times, you have to be cautious. Consider how you can maximize your runway without seriously hurting your business. Every penny you spend matters. Review your expenses and cut costs that are unnecessary.
Raise money if you can: If you were planning to raise money before the coronavirus breakout, don’t postpone it. It is likely to get even more difficult once things return to normalcy. Take every opportunity to strengthen your financial condition.
Get ready for drop in sales: We have already experienced this at FS. Some of our partners are reducing their spending and it is likely to happen more as we go deeper into the crisis. Readjust your forecast, close deals that you can and push hard for sales so that you can recover. Overall, be prepared to handle a significant drop in your sales.
People: Given the condition, companies are adopting various measures to control payroll expenses. To suggest to let people go in this condition is hard but you need to be realistic and see the bigger picture. Several companies told us that they are implementing a salary cut instead of laying people off. Others are mulling over options. Overall, it is important for you to think about how you can reduce costs.
Make quick decisions: You don’t have a lot of time to deliberate now. Every decision that you need to make now, has to be made quickly. You need to reduce costs, do it quickly. You need to decide about your payroll, decide quickly. You need to decide about your marketing, decide quickly. Time is of the essence. And this is not the time when you put off consequential decisions for tomorrow.
Look after your people: While it is critical to reducing cost as I mentioned earlier, it is also important that you look after your people during a difficult time. You can ask your people to work harder or take a pay cut but also find ways to support them as much as you can. Often difficult times define our culture and when you have the back of others in the time of need, they will have your back when you need them.
Focus: Don’t get distracted by anything. Don’t lose focus, to worries and politics and Facebook wars, focus on your business. Identify issues and ruthlessly solve them.
These are some of the broad ideas that I believe will be useful for startups across the board, particularly in the context of Bangladesh. If you are trying anything at your company, I would love to hear them. You can email me at [email protected].
References and Resources:
1. Sequoia Capital: Coronavirus: The Black Swan of 2020
While writing this article, I have drawn heavily from this piece from venture capital firm Sequoia Capital. You will find that I have borrowed some ideas from this article. This an excellent read in its entirety.
2. Paul Graham: Why to start a company in a bad economy
An excellent essay from inimitable Paul Graham. It is not directly on dealing with difficult times, but it has useful ideas that can inspire you.
Again, useful ideas.
What are you doing to minimize the impact of coronavirus shutdown on your business, I would love to hear your ideas. You can email me at [email protected]
Ruhul Kader is a technology business and technology policy analyst based in Dhaka, Bangladesh. He is also the co-founder and CEO of Future Startup and author of Rethinking Failure: A short guide to living an entrepreneurial life. He writes about internet business, strategy, technology, technology policy, and society. He can be reached at [email protected]