The ongoing coronavirus pandemic is impacting all the businesses in almost every industry around the world. The companies are losing their revenues due to massive decline in sales. This has resulted in many companies laying off employees and cutting the salaries of employees. For instance, Marriott International has laid off thousands of employees, Famous restauranteur Danny Meyer’s Union Square Hospitality is laying off 80% of its workforce, TripAdvisor is laying off 900 employees, to name a few.
All the companies during this pandemic want to ensure that they can reduce the costs and maintain cash management to survive in the market for the next 1-2 years. There aren’t any companies looking to raise money. Moreover, many trade shows, IT and tech conferences, etc. have got either postponed or cancelled.
In such a scenario, the businesses that are suffering the most are the startups and SMBs. This is because they are low on budget, unlike large enterprises. To survive this pandemic, they need to have a Plan B and a right strategy in place. They are not looking for profits, but to survive the pandemic and let things pass by without getting out of the market.
So, if you are a startup or a small business, you need not to panic and craft a survival strategy to stay in the competition. In this article, we have mentioned some crucial steps and tips as suggested by veteran entrepreneurs and decision-makers.
Strategy for startups to survive the COVID-19 pandemic:
1. Analyze your expenses v/s revenues
Now that the cash flow has got impacted and the number of new customers has decreased, it is time for every startup to properly analyze every expense related to the business, whether it is a fixed expense or variable expense. Once the assessment of expenses is done, now analyze the actual revenues every month, especially the revenues of the last few months and current month.
The aim of this analysis and assessment is to get a clear view and picture of the financial condition of your business. This will help you to plan things accordingly in the current market. Also, you will be able to look for ways to minimize the expenses. If you don’t know where the money is being used, you can’t reduce the spending. It will be better to do the required analysis as soon as possible.
2. Renovate the business model
Keeping the market scenarios in mind that are changing every week for the worse, the startups need to have a look at the feasibility of their business models and renovate the things. While assessing your revenues and expenses, also find out which of your services or products are still in the demand and which are not. There might be services or products whose sales have increased and there might be the offerings whose demand has decreased.
On the basis of that, you have to renovate your business model and bring those products and services at the front desk which are still in demand. Change your marketing strategy and focus on these services. Be it your website’s homepage or social media, you have to bring the in-demand services in focus. Market these in such a way that the sales can increase further.
3. Have a plan for the next few months and year
This is a difficult time for the entire world and the number of coronavirus cases is only increasing. It is hard to estimate till when the pandemic will last. It may take 3 months, 6 months, 9 months, or even 18 months. So, you have to plan things considering the scenarios for every duration. For example, you should have a plan and strategy for what should be done if the pandemic is here to stay for next 3 months. What will be your plan if the pandemic runs for 9 months or more?
You should have to consider everything. If the pandemic will continue for the next 3 months, you can stop the hiring of new candidates, travel expenses, etc. But if it is here to stay for a year, things and plan will have to be different. Maybe then you would need to think about negotiating your office building rent, reduce salaries, even lay off some employees, etc. Survival may need you to make some strict decisions.
You may need to change your sales strategy according to the things going on in the market. Things in the market will surely change with the time. You might need to increase or decrease your budget from the marketing. You might need to hire new people for sales. The thing is that you will have to be ready for every scenario.
4. Keep things transparent with the employees
As mentioned in the above point, you may need to deduct or halt salaries of employees, lay off some of them, and may need to hire for specific departments. This is why you have to communicate with your teams transparently, so that they too can have a backup plan in place. Laying off or halt in salaries may not go well with everyone. You wouldn’t want your teams and employees to curse you for everything.
5. Maintain healthy relationships with distributors and vendors
Business and entrepreneurs are aware of what the world is going through today and what are the key challenges for startups and small businesses. Most of the startups resell services and products from distributors, suppliers, and vendors. They have to pay these parties for the services and keep the business in running mode. In these difficult times, don’t panic, and try to maintain a healthy relationship with your distributors and vendors. Don’t ruin the relationship or your business may suffer.
If you are an entrepreneur running a startup, the above-mentioned tips will surely help you to survive during the COVID-19 pandemic. It’s time for you to analyze your expenses and revenues, have backup plans in place, keep things transparent between employees and distributors, and renovate your business model with the time.
If you have more suggestions to add, do let us know via the comments below.