Business

Startup survival guide for COVID-19

7 min read

The opinions expressed by collaborators are personal.

The pandemic caused by the COVID-19 coronavirus has caused all companies worldwide to take measures to prevent contagion , making them a vulnerable sector of the consequences that this crisis could leave.

Startup survival guide for COVID-19
Startup survival guide for COVID-19

According to Bloomberg data, a global economic output loss of 2.7 trillion dollars is forecast. In addition to that companies will have to lay off staff or cut wages.

One of the types of companies that could most resent this crisis are startups. These types of firms are known for their high risk of failure: in Mexico alone, around 70% of creative ventures fail, according to the Inter-American Development Bank (IDB).

However, startups are also known for speed of action, their ability to work outside the comfort zone, to experiment and innovate. In fact, many startups that today are large companies were created in difficult times, such as Cisco, Google or Paypal, and in more recent cases Airbnb or Stripe, which were founded in the midst of a global financial crisis.

How can a startup survive in a global crisis like the one we are experiencing? The accelerator and investment fund Seedstars and the online education platform Platzi and, set out to create a survival guide for startups , with different tips and tools that will be very useful:

Right tools

As a preventive measure, the home office has become a standard for companies. This is a measure that employees usually enjoy, however, we are in a situation never seen before, so it is necessary to provide the necessary tools so that employees can perform correctly. The most important thing is to choose the applications that are truly useful and are the ones you normally work with.

The recommended survival kit includes Google Drive , for storing and sharing files; Zoom or Hangouts for video conferencing; Slack or Telegram , to maintain communication; and Trello, to monitor the tasks of each employee.

Take care of the team

Although the team is working at home, it is important that they follow the sanitation standards recommended by the World Health Organization (WHO). Likewise, being in a space for so long, as well as the large amount of information that abounds in the media, can lead a person to fear, anxiety or panic, so it is advisable to open communication channels between members of the company, for example Slack.

It is advisable to organize virtual coffee breaks and happy hours through video calls , respecting business hours. Remember that these are difficult times, so empathy should be promoted more than normal within the culture of your startup.

Put the grain of sand

Restaurants, cinemas, museums, shopping malls and other entertainment venues have been closed to prevent more infections, so more and more people are staying home. Given this, different companies have decided to offer free online courses, conferences and workshops. For example, Platzi did a course on remote work, and Seedstars offered a free module to launch an MVP, among others.

If the startup has the ability to create or promote some free content or apply a discount on its products, there is no need to hesitate. This will be of great help so that the community can deal with the current context and, in turn, the company gains confidence and attracts a new audience.

Managing B2B relationships remotely

You must take advantage of the available technologies to be able to be in contact with customers and suppliers, be they instant messaging applications, videoconferences or even email and phone calls. In addition, it is important to change the focus and begin to prioritize companies with products or services related to the situation, such as food supply or the health sector, since these will continue to generate value even in times like today.

On the other hand, if the startup can continue to add value and has an active market, it is important to be heard by the right person.

Offer support and ask for feedback

It is important to maintain a close relationship with customers to increase retention. Therefore, efforts should be made to obtain as much information as possible about their situation and the impact that COVID-19 is having on them. This will help the startup to know if it is necessary to adjust its strategy, change its way of working, or even suspend it. .

Support and consulting services can also be offered. For example, the Mexican startup Getabed has dedicated itself to supporting its hotel clients to reschedule their visitors. In the United States, different startups working in the food delivery sector, where most of their users are B2B, have created gift cards for restaurants, which can be purchased by consumers and, thus, support these businesses during the time they are closed.

Impact on fundraising

In times of crisis the economy is affected, so startup valuations will drop. This is because investors stay away from startups, although there may be some who hope to participate to support promising and strong businesses. So you should wait to raise funds, and if not, accept a lower valuation instead of running out of cash.

We should not forget current investors and send them regular updates on the startup's performance, the decisions being made and the scenarios expected regarding the coronavirus crises.

Runway optimization

In these cases, the objective is clear: to extend the runway by all necessary means. In addition, you must be ready for any scenario, so making a projection with the worst possible scenario will be a great help. That is, having a plan in case income is reduced by up to 80% or more. Considering the cash inflow in the forecast will also help, as well as asking clients with outstanding balances when they can pay in a realistic scenario.

Similar Posts