Startup founders trying to weather the COVID-19 pandemic will face a financial crisis that will likely be worse than what was experienced during The Great Recession.
Most startups are already laying off some of the best employees as they can’t continue to pay them without consistent incoming cashflow. Especially for startups that depend on daily consistent cash flow to survive.
It’s unfortunate, no one knows when this pandemic will come to an end. I found an interesting study from a Poll conducted by the National Small Business Association on the impact on COVID-19 on small businesses.
The study shows that over 77% of startups are very worried about the pandemic and about 54% are projecting that the US economy will likely fall into recession during the next 12 months.
Here are some of my tips and tricks startups can employ to survive during this pandemic
1). Don’t panic, take care of yourself
“Worrying is like paying a debt you don’t owe.”
There is every tendency for you to be worried, panic, and all that. Everyone at one point has had the urge to panic even though for some people after a while they get over it.
There are several reasons to panic especially when you are still paying salaries, your revenue is low, expenses are still high — you are running out of cash.
In the midst of this, remember to take care of yourself, eat well, get some exercise, enjoy the time with your family. This is important to help you stay calm and focused. Of course, this will also help reassure your employees that things will be alright and keep them motivated to come up with ideas that will likely help you all move forward quickly.
The truth is, some times you’ll be faced with making some decisions that might seem difficult before you do so, take time to balance your mind, emotions, and yourself in order not to make mistakes and make drastic decisions that will hurt your business out of fear. Make sure to ask for help when necessary, talk to some of your friends about the decisions you are about to take.
2). Make an X-month financial plan
No one knows when this pandemic will be over. It’ll likely take as long as 4 months or more. We don’t know. We are already 4 weeks in from here.
You need to plan for survival. Sit down with your team and key decision-makers and draft out a plan to help sustain your business over a long period.
Cancel subscriptions you can find cheaper alternatives for or the subscriptions you won’t be using for a long time. As much as possible, don’t pay for what is not a need.
Speak to your landlord or suppliers and try to re-negotiate your payment terms— negotiate how you can spread your payments in months. Hopefully, they’ll understand. The truth is, it’s also in their interest if your business thrives.
For example, when Emerson of FixYourOwnBindery.com lost 90% of his business during The Great Recession, he called his landlord and explained that he’ll likely miss rent because he is going to go out of business. His landlord asks him to bring over his bank statements.
“He sat down with me and went through all of my expenses with a red pen, crossing things out — ‘You don’t need this, this, this,’” says Emerson. “That man helped me save my business.”
Eventually, Emerson cut costs totaling over $3k per month.
Also, you can cut costs by hiring freelancers to work on your projects instead of hiring new full-time employees at this time.
Look at your personal finance and if possible speak to people who you can have an open discussion with on how to control your spending and spend only on the necessary things. Put on hold what needs to be put on hold and pay only for what is necessary. At the time.
2). Turn on new opportunities
“The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger–but recognize the opportunity.”
― John F. Kennedy
There are always opportunities in every situation but you don’t want to capitalize on a situation like this, however, this time can also be a time for you to re-evaluate how you run your business.
Think of innovative ways you could digitalize your services/products and offer them online. This will help you stay relevant, serve your customers, rethink, and restrategize your marketing strategy, and ultimately help you improve your revenue. This might be tough for some businesses but you can pull through and make it work.
3). Get your staff to learn new skills
There is no business without your staff. In fact, according to the Association for Talent Development (ATD), companies that offer comprehensive training programs have 218% higher income per employee than companies without formalized training.
To give your business a fighting chance during this pandemic, upskilling your staff isn’t a matter of choice. You need them to be at their best especially now that you’ll need them to work online and get involved in a new way of doing business.
An investment in knowledge always pays the best interest.”―Benjamin Franklin
The skills they’ll learn will help them be more productive, efficient, and allow them to support your business growth effectively at this time.
For example, you could get causes to help your marketing team brace up their sales skills and move forward faster instead of hiring a new sales executive. Look for skills that can enhance their performance based on their team and roles.
4). Avoid Debts, Negotiate your debts
As much as possible you should try to avoid getting into debts except you are getting federal government relief loans. Disclaimer: It’s best to check-in with your financial advisor to know which debt management strategy will work for your specific business.
Negotiate your debts repayment terms, try to get some more time to pay your debts or split the repayments into bits.
You are not alone. We are in this together. We’ll go through it and come out victorious. Brace up, hopefully, the advice on this post helps in a way to help you survive this pandemic.