The impact of this new normal on the business environment

By: Renzo Salas, Finance Coordinator Argentina, Chile and Peru Wayra Hispam

The impact of this new normal on the business environment
The impact of this new normal on the business environment

The effects of the COVID-19 pandemic have moved the market and the realities of people and businesses. Employees, customers, suppliers, companies and startups in each of their roles have seen their long-, medium- and short-term plans get mixed up; According to the World Bank, Latin America was one of the hardest hit regions as its gross domestic product fell 6.7% (excluding Venezuela) due to the health crisis in 2020 due to the sharp economic downturn.

The results and reactions of the individual entrepreneurial market players were different, as there was no precedent for the reaction in the recent modern era.

In the startup ecosystem, for example, we can see how some business models were affected by quarantines and mobility restrictions overnight. The entrepreneurs hardest hit include entrepreneurs who have focused on organizing events and shows, as well as those associated with the tourism and service sectors: restaurants, hotels, amusement parks and those who provide services to traditional companies, theirs Income ratios have declined.

On the other hand, if this new normal has taught us anything, it is the ability of startups to seek solutions with very limited room for maneuver and try to keep the company afloat. Some have been hit by expansion plans where failure is the product of a timed coordination against a pandemic that nobody or very few could have had on their radar. Some have managed to overcome these ups and downs, others have not, but it must be borne in mind that the entrepreneur or his execution is not to blame, simply the battlefield has changed so much that more could not be done.

In this context, measures had to be planned and implemented in order to avoid major effects, such as: protection of the till, rapid generation of new business areas by adapting the available technology, intelligent distribution of commercial efforts to the various markets, as not all countries had restrictions the same rigor and at the same time. Above all, however, it was important to support the mobility needs and restrictions of customers and to respond to them. Mature startups also had an advantage over younger ones, as they provide oxygen and have greater capacity to act through internationalization and working in three or more countries. Latin American startups with a presence in Mexico in particular had an advantage over those that only operate in Peru and Chile, where more restrictive measures apply.

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On the other hand, startups in the edtech and logistics sectors are experiencing a gold mine, their sales have multiplied many times over in comparison to previous years, their activities in several countries in the midst of a pandemic expanded and deepened and large corporations have seen emergencies alleviated, thanks to the timely appearance of these startups that have supported digitization and transformation.

At Wayra, Telef├│nica Movistar’s corporate investment fund, the pace of investment and the search for opportunities in startups with high potential has not stopped. On the contrary, in a crisis environment in which investments in Start-ups That they can handle this wave of continuous change and make the most of it. Understand the COVID crisis as “terrible” due to its impact on the health and economies of nations, but also as an accelerated testbed to determine the potential of new businesses that have been launched during this period.

For many Start-ups The global event of the COVID-19 pandemic resembled a natural selection event like Darwin’s theory, so only the entrepreneurs were able to overcome these events based on effort, creativity, luck, and most importantly, resistance with the support of their teams. The effects of this pandemic will be felt in everyone, including startups, with improved business models, more tailored sales channels, and great lessons on the importance of risk diversification.

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