Not just surviving, but thriving through COVID-19: A guide for startup founders
The onslaught of this pandemic has upset so many aspects of our daily lives and startups are no exception. Hailed as a bright spot in the economy, today many of them are at the end of their ‘runway’. Delayed deals, paused investments and falling consumer spends are becoming commonplace during this time, dampening even the most optimistic startup founders’ sentiments.
Indeed, one of the biggest fallouts of the pandemic for startups is the drying up of investor funds. 2019 was a great year for Indian startups with B2C startups closing over 425 deals worth $6.23 billion in funding. Carrying on that trend into 2020, VC investment in Indian startups in the first two months was even higher than in the same period last year.
However, once the pandemic started tightening its grips, VCs too chose to tighten the strings of their purses. Research firm Venture Intelligence found that several investments made since March were by VCs investing in existing portfolio and in May, the amount invested was about one-fourth of that invested in May 2019.
Meanwhile, millennial buyers are struggling with uncertain job prospects and, as a result, have become more conscious of where they are putting their money.
This all sounds rather bleak, doesn’t it?
Well, the good news is that history is replete with examples from crises that can be handled and sometimes even used as a springboard to building thriving, successful businesses. In fact, the global recession of 2008 spawned some of the ground breaking businesses (Uber, WhatsApp, Slack) that we can’t do without today.
So, how do you survive and conquer this crisis for your business? Here are a few pillars for young startup founders to use as a foundation to build their business through any crisis, not just this one:
Have a purpose behind your business
Having a purpose that you are working towards outside of revenues and profit can be a huge motivator during this time. Once you have this in place, you immediately become flexible in everything else, as long as this purpose is met.
For instance, at The Better Home, our purpose is to empower citizens across the country to make better consumption decisions and be kinder to the planet.
Now this purpose can give rise to multiple business models, product categories and formats – and that is something that will keep evolving -- but the heart and core of your business will always be the same. Having a purpose also helps in developing more meaningful relationships with your customers.
In this case, they do not ‘purchase’ your product; they are a partner in your journey and the bricks that make your venture economically sustainable.
Use this time to build your offering
If your sales have dipped during this period, or if your operations have shut down due to the lockdown, use this time to speak to your customers, brainstorm with your team and improve your offering. At The Better Home, during the nation-wide lockdown we reached out to our early customers for feedback and received some very valid and practical suggestions on how to improve our user journey.
We devoted the 45 days of lockdown to focus on implementing this feedback. This way, when the lockdown lifts and when business is back to normal, you hit the ground running. Focus on doing what you always wanted to do with your products, but “simply didn’t have the time” to.
Focus on what you CAN control
During a time like this, it may feel like there are so many things that are “out of your control”. While that might be true, especially when there is so much uncertainty around us, there are definitely some things that are within our control. Strip down all the regular processes to the fundamentals and look at how you can revisit them in the current context, and how it will help make your business more sustainable.
For instance, are all your current expenses necessary? Can you cut back on advertising spends and look at more organic ways to spread the message about your brand? Do you really need all the tools you are spending money now, or, is there a simpler way to work around it?
Take charge and act fast
The ability to make quick decisions is a very underrated skill and what makes or breaks a company. Responding swiftly to feedback, making a decision and seeing it through to execution is what sets businesses apart from the rest.
In this case, look at the current market and user base for feedback. Are people uncomfortable stepping out to buy your products? Go online, quickly. Are customers looking for alternatives that are lighter on the pocket? Release a lower cost SKU. At our brand, some of our users wanted larger quantities of products to avoid contact with our delivery persons on a monthly basis. We immediately created a 5 litre can for these customers and they are delighted with it.
Frugality is key
Treat this cash crunch as a blessing in disguise and allow it to steer you towards smart and efficient use of your funds – keeping frugality at the heart of your operations.
In my experience, frugal startups, more often than not, have the edge over most funded companies because they are always seeking a more efficient route to the same goal. Frugality gives way to innovation and sustained growth.
The ability to flow, adapt and persist through tough times is one of the greatest advantages that startups have over large corporations. And what better time to harness this advantage and reroute to cater to the new world.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)