The COVID-19 action plan for early-stage startups
COVID-19 has birthed an unprecedented norm of social distancing and remote working. While the coronavirus is affecting big and small businesses across the world, it can especially hit early-stage startups badly. Here is what they can during this time.
We are seeing times that are unprecedented. It’s doubly hard for early-stage startups that, in any case, function in tumultuous times life. These macro shocks cause just more distress. Over the last seven to 10 days, I have been on non-stop calls/Zoom conferencing with founders of our early-stage portfolio companies and my friends in the startup world, brainstorming with them on how best to navigate this new world.
Below is a starter list of ideas I have collated from all those conversations. Some of these may seem obvious and hopefully you are already implementing them. Not all of them will be applicable to you. And there would be many more that you are applying on an individual level. The idea is to share the common threads I picked up for everyone to build on top of.
Special thanks to my buddy Chirayu Wadke at Google Cloud, Singapore who helped put this together.
Employee safety
- Have a work-from-home (WFH) plan in place with video calls. Keep the office premises sanitised.
- Ask yourself if you are okay to let revenue dip for the sake of your employees. The answer should be a yes.
- Offer health benefits to employees, maybe get a one-time blanket package just for COVID-19 or for the next 12 months at least.
Shore up revenue
- If you are a B2C company, try to get your customers to buy yearly “prime” like memberships at a bargain. You get some cash today and also lock in customer when demand comes back up.
- If you are a B2B2C company, co-build these offers with your partner brands.
- If you are a B2B company, speed up contract closure with discount/free offers for six months but pay today for a year/top of the stack feature bundle at rock bottom plan.
Burn and capital
- Reduce your burn –You need to have 12months+ cash in an ideal world
- Reduce all variable costs including marketing as much as possible since revenue uptick will be low. We don’t know how long this will last but you need to alive at the end of it.
- If you have a decent amount of cash, raise (venture) debt to supplement it.
- Sign up for any government waivers or grants form large tech companies (Facebook/Google/Amazon) that you can avail. The government wants the economy chugging along, while large tech firms want to help keep their customers stay alive.
Build the business
- Keep an eye out for hiring great candidates who are getting laid off in other companies.
- Build unique campaigns making use of the lower ad rates in the market. Build brands when everyone is sleeping.
- Focus on finishing off all the product and tech roadmaps that you never got to because customer issues always took priority. Remember, Mandela wrote books in jail.
- Lock down any procurement deals that may be sweeter today since your counter-party would also be in a stress. Don’t feel guilty, you would be helping that business shore up revenue.
The tough questions
This a right time for hard pivots. If your product is not already doing well and you are hitting wall you might as well use this time to pivot completely to another idea.
- Shut down some part of the business that you always felt close to but never felt like closing. This might be the trigger you were waiting for
- Don’t worry about what future investors will think. Any actions taken today would be justifiable. Remember these are unprecedented times.
(Edited by Evelyn Ratnakumar)
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)
