The world as we know has changed forever – in a matter of weeks, the entire landscape of the global economy has transformed. We are now faced with a challenge so great; it would take a strong collective effort from all of humanity to overcome it.
The COVID-19 pandemic has brought about a rapid transformation of the entire start-up ecosystem. The potential investors have also adapted and shifted their investment focus accordingly.
A few of the key challenges currently facing startups are:
- Cash burn with little to no revenue
- Retaining their customers whilst holding on to their employees
- Achieving Key Performance Indicators (KPIs) of investors
- Maintaining their supply chain
- Ensuring the safety of their stakeholders
In order to survive this crisis, startups now need to:
- Identify current potential markets: Analyze and identify which markets have emerging opportunities and which are performing poorly. Currently, some of the emerging sectors are:
- Entertainment/ Streaming services
- Data Analytics
- Online gaming platforms
- Focus on profitability; reduce cash burn: It’s time to go back to the basics and focus on increasing profitability. Startups need to shift their business strategy from maximizing intrinsic valuations to adequate revenue generation and profit maximization. One of the main challenges facing startups is limited cash-flow. In order to be optimally financially positioned during the current crisis, maximizing your profitability and conserving cash is the way forward.
- Product-market fit: With a shift in the landscape of the global economy, comes a completely new set of needs for the customers. Spend time to identify these evolving requirements, design a prototype which can solve these problems and do it better than anyone else in the market. It is also wise to conduct plenty of online research, collect feedback, and update your prototype accordingly, so as to launch a product that is market-ready for the post-pandemic era.
We also need to make sure that our start-ups are adequately adapted for the current digital landscape.
- Redesign your supply chain: Transportation costs have increased and the availability of transportation has decreased. Negotiate with every available supplier and manage your inventory. You may also form partnerships with similar businesses and bundle your resources so as to maximize utilization and share logistical costs, i.e. you can use the same supplier to transport goods; merge your orders together, etc.
- Understand investors’ current perspectives: We need to be aware that investors are also scrambling to secure their finances. It is wise to be transparent with your investors during these trying times. It is important to keep them updated about the following:
- What you are doing
- Why you are doing it
- How you are doing it (i.e. your method of implementation)
- What is the outcome
Startups who will be able to incorporate sheer determination, immense courage, and patience, will be able to survive through the impacts of COVID-19. It is now survival of the fittest. However, with every crisis comes opportunity, so do something that will extend your business’ runway.