The COVID-19 pandemic has had devastating consequences for economies across the globe. On one hand, the pandemic has impacted businesses negatively, on the other hand, it has also pushed organisations to rethink conventional knowledge and open up newer avenues.
More and more companies have adopted remote working, digital infrastructures, and more tech-based solutions to operate their businesses. All these changes have pushed the boundaries of what is possible and have helped companies, especially startups, wade through these turbulent times.
Startups have been the hardest hit during these past few months, while many have been pushed to the brink of survival; others have had an early demise. Hence, now more than ever, startups need to devise strategies that are crisis-proof, and here are a few ways in which this can be achieved.
Due to their nascent presence in the world of business, startups are particularly prone to financial turbulence. And crises like this pandemic can only exacerbate financial crunches.
According to a survey conducted by Startup Genome, a research and policy advisory organisation, the pandemic has led to a shocking 41 per cent of startups globally being in danger of slipping into a “red zone,” defined as having three months or less of cash runway left.
Such scenarios can be better managed, if not avoided when strong and strategic financial plans are put into place. A financial plan usually entails outlining business goals and setting aside enough money to achieve those goals. It also provides a sort of guidebook for expenses and in case of an economic crisis; it can help entrepreneurs come up with financial plans beforehand.
Taking charge of cash flow and cash reserves
This step is an appendage to sound financial planning. Several startup entrepreneurs often lack the appetite for number crunching and understanding financial data. This isn’t a good sign because understanding cash flow and being able to read balance sheets is crucial to the survival of any business.
Making sure the company has enough money to weather financial storms is important because the longer a business can sustain during a crisis, the more likely it is to survive harsher times in the future.
Maintaining investor trust
Investors today don’t just want to see great ideas; they want to understand the plans that entrepreneurs have to sustain their business through crisis situations. Startup leaders, therefore, need to be armed with risk mitigation strategies along with business vision and roadmaps for the future.
A key part of gaining investor confidence is showing them that your turnaround strategy in case of unforeseen situations is going to work and that the business will only emerge stronger. Startup entrepreneurs have to view crisis situations as opportunities to reinvent and reshape and not as a doom and gloom scenario.
Be willing to adapt
Adaptability is the only way for companies to come out on the other side of this pandemic. Companies that cling to old models of operations are only accelerating their demise. A good example here would be that of the fitness industry; at the start of the pandemic, predictions for the fitness world were bleak, with social distancing and hygiene concerns on everyone’s minds, gyms, and fitness trainers were staring into an abyss.
However, this industry has quickly made a turnaround because it adapted and made the best out of a bad situation. Most gyms and fitness brands have adapted to digital fitness and provide more than just boring exercise tutorials to their customers.
Fitness brands have created a whole new digital infrastructure equipped with virtual work-out sessions that are tailor-made for a variety of customers. Fitness trainers around the world are offering sessions via Zoom, Skype, Instagram, Facebook live streaming, and a host of other platforms. All of this has led to several fitness brand apps seeing a spike in customer subscriptions.
Customers are literally the key to any business and they should be any entrepreneur’s number one priority. During a crisis like this pandemic, scores of people have been furloughed, thousands have lost their jobs, and countless others have witnessed their loved ones dying; therefore this isn’t the time for hard-sell marketing. Instead, brands and companies need to focus on communicating empathetically.
Brands have to walk the tightrope of subtle marketing and public service. A lot of brands have successfully done this during the pandemic, automaker Toyota that would usually have high-powered ads selling top-notch cars recently came out with its ‘We Are Here For You’ ad campaign.
The ad is a great example of empathic marketing attuned to the needs of customers. It reassures people that Toyota stands with people and will support communities through these tough times. It manages to strike the right tone of heartfelt empathy and brand recall.
Now more than ever, people feel the need to be connected to each other. Just because people are not venturing out of their homes, doesn’t mean that they do not wish to be in sync with what their favourite brands are up to.
Hence, engaging with customers is important; out of sight does not have to mean out of mind. Several fashion startups have managed to harness the true power of social media during this pandemic by asking their customers to come up with style ideas and sketches of outfits. Such engagement activities can help keep the brand alive in audiences’ memories and lead to creating a loyal customer base.
Startups are at a clear advantage in this space because of the young workforce they employ. Entrepreneurs must be willing to fully exploit the digital medium to their advantage; from putting out the right kind of content to creating brand recall, startups must cement their presence on social media.
Crisis situations are hard on everyone, but it is important to remember that companies who survive through this will be the ones to emerge stronger and more resilient.
This article was first published on e27, on Sep. 4, 2020.