4 tips for startups during a pandemic
In the rapidly changing climate of a pandemic world, corporations have had to radically rethink their strategies for survival. The news is full of businesses adjusting to the demands of the outbreak — and the devastating fates of those who have been unsuccessful. In times of crisis, the divide between opportunity and threat is razor-thin, and a smart strategic plan can be the difference between leveling up or going under.
The startup world is a perfect microcosm for these strange times — even in normal circumstances, a startup is always on a tightrope, one step away from unicorn status or financial ruin. While the outlook may seem bleak, especially for startups counting on 2020 fundraising rounds, there are actually more opportunities for growth in a time of crisis than ever. Crisis exposes the failure of the status quo — instead of circling the wagons, investors are often more likely to be seeking innovative solutions.
As startups pivot to meet the changing landscape, here are four things to consider:
Evaluate and reallocate budget: The first step in any economic crisis is to evaluate your spending channels, and determine where you can cut costs. Obviously, many of those decisions happen on the personnel level, which is difficult at any time, but especially in a small startup team and at a time of insecurity.
Short of layoffs, there are other channels for savings. Are you paying money for SaaS services that are no longer relevant or can be taken on by employees? Organize your subscriptions and get rid of those you don’t need. Explore the possibility of renegotiating contracts with suppliers and contractors to benefit both — maybe contracting less hours or accepting discounted rates. Evaluate and redirect the flow of your marketing dollars — an ad on the subway may have been a good idea three months ago, but it’s not doing you any good now.
As a startup, you are always adapting to meet changing needs and most likely have a lot of irons in the fire. Now is the time for laser focus: to concentrate all available assets on your money makers.
Support your employees: Maintaining employee morale is crucial at a time like this, especially when budgets and responsibilities are being reallocated and you may have to make significant staff cuts or changes. Often you are asking your employees to do more for less, and it’s imperative that they feel valued and supported.
Transparency is key — the more knowledge an employee has on the direction that the company is taking and why, the more personally invested they will be — loyalty is more likely to come out of this personal investment than from financial incentives. Of course, you want to make sure that your employees are also feeling financially secure. Contributing seed money to an employee’s HSA or 401K, or instituting a match program for contributions, can encourage employees to save. If possible, offering stock options in lieu of raises or to counteract pay cuts is another way to build security.
Above all, don’t ask your employees to do anything that you are not already doing yourself to a greater degree.
Recalibrate and reposition: A solution that is not COVID-applicable is likely to be deprioritized on the purchasing chain. The businesses that can adapt to the demands of a pandemic and post-pandemic world are more likely to survive its challenges, and attract investors who are narrowing their investment channels.
“Reposition” is the key term here — this is not a call to invent new solutions, or even to provide a solution specifically for Covid-related needs like symptom recognition or virus testing. It’s about “reading the room” — what people are looking for in times of recession, in times of social distancing — and leveraging the infrastructure and workflows already in place to scale solutions.
Ride-share companies are pivoting toward food and grocery delivery, restaurants are working from “ghost kitchens” and developing new menu concepts conducive to drive-ups and leaner budgets. Personal training apps have come up with modified workouts that don’t rely on the use of gym equipment and can be done in a smaller space, like a studio apartment.
These changes fit the needs of the current crisis, but also look forward to a time when consumers will be operating on leaner budgets. People still spend money in the lean times — in fact they are much more likely to spend money on small luxury items when they are holding off on big purchases. Sometimes it’s just about figuring out where your business fits in a changing landscape, and adjusting your messaging to emphasize that niche.
Empathetic selling: In a time of global crisis, the last thing a company wants to do is come off as insensitive to the pain and suffering of those affected. Consider the ways that your business can help alleviate the pain of others, and do everything you can to support your client base. Offering flexible pricing (if you have the financial runway to do so) or sharing best practices and tips with traditional competitors will pay dividends in the long run.
As an external event, the pandemic is much less likely to affect commerce long-term than an internal event like the ‘08 recession, and if startups can adapt to the needs of the post-pandemic landscape and weather the next 12-24 months, their chances for survival are high — well, as much as they ever can be in the volatile startup world.