The pandemic we are suffering these last weeks because of the coronavirus, is becoming an international economic crisis, with ramifications for all industries and markets, very similar to the one we suffered before in 2008.
An economic crisis that has crossed the borders of several countries, is wearing down and affecting both large and small companies, which is a great challenge for certain companies and their employees.
New entrepreneurs, who have become known for their creativity and flexibility when starting up a new company and project, are quickly facing this temporary crisis from different ways. In recent days, entrepreneurs from different fields and areas have begun to share and visualize their behaviour and routine as a result of the business challenge they are facing due to this economic crisis, which is a direct result of the coronavirus pandemic. Many of them are businessmen who previously went through a similar economic depression because of the crisis that left us suffocated in 2008. Therefore, they want to record their situation and share it with other businessmen.
That being said, we are going to leave below some ideas and advice from entrepreneurs who faced this crisis directly:
1. The crisis is not forever, it is something temporary.
A crisis is long, and often challenge the mental and economic resilience of entrepreneurs. The most important parameter for overcoming such a complicated period is the quality of the relationship between the entrepreneur and his partner (husband or wife). The more support there is in that person, the more bearable the crisis will be. Another reason is to support the entrepreneur.
Similarly, the mental strength from partners of the startups, employees, investors … if you find a strong point with them, we will be able to raise the company up and not decline at any time. This is the crucial moment to take advantage and look directly into the eyes of the partners, you can take advantage of this situation to communicate with them in a direct way and not only through WhatsApp or any online platform.
2. Tell investors the company’s real situation
It is very important to be transparent and clear when communicating and making known the situation in which the company is to all investors to work with them directly and jointly.
On one hand, the startup works with a minimum of funds, as we can find ourselves in this situation, that of being under minimums.
On the other hand, try to ensure the investor remains fully committed to us. Maybe with this situation we will think about leaving the company and looking for another job, but we must be clear about our goal and believe in it, so it is better to continue until the end and reflect on the situation we are in and be able to move the company forward.
We must have a coordination with both investors and employees, in order to have a clear point, not to let our startup sink. We cannot forget something very important, in times like this we test the mettle of an entrepreneur, and investors see how that person really works in limit situations. That is why we have to take advantage of these situations, to see how the company works and decide whether to invest more money or not. Many times, the functioning of a company depends on the attitude and behaviour of the entrepreneurs and founders of the company.
3. Reduce everything that is not critical and keep expenses to a minimum
In a crisis, it is important to reduce everything that is not critical and keep start-up to a minimum (reduce office space, communications, utilities, taxes, etc.). If the entrepreneur receives a salary, he must take the minimum necessary for his subsistence. This is a very hard thing to do, but the welfare of the company must be considered, so we must and have to keep only the most important employees (e.g. technical support to customers). Retaining customers is paramount.
New companies depend on them in the present and in the future. Everything possible must be done to retain them, including updated business models, payment deferrals, payment fees, etc.) What do you do with the rest of the staff? Put them on unpaid leave, reduce their salaries to subsistence level, defer payment (only with their consent), provide equity for the work, etc.; as a last resort, you may have to let some go. Employers are creative. They should talk openly with employees (and suppliers) and try to reach agreements.
Even if it costs a bit, it is worth a try. Does your startup have an external development team? This is the time to reduce the work to a minimum and pay as little money and actions as possible, where entrepreneurs see who stays with them through the storm and who does not. It is also the time when the best partnerships are made, the ones that will last the life of the business.
4. Business development and the commercialization should be as efficient as possible
Entrepreneurs have a golden opportunity to harness the power of entrepreneurial communities to potential customers around the world who understand – precisely at this time (there are many similar ones who are much more efficient and useful this time!)-. They must increase their dependence on external technologies because organizations with a high technological content are more flexible and navigate crises like Covid-19 with greater ease.
5. You must be creative and bring out the best in ourselves
It is time to be creative and take advantage of this situation to make the best of ourselves. Therefore, we have the opportunity to look for new markets and for that reason we have to think about adapting and finding solutions to the markets that are less affected during this crisis. To accomplish this, you have the opportunity to brainstorm with your employees, partners and investors. This is a time when entire infrastructures are looking for opportunities to go forward, it could be for a single joint venture or a merger and acquisition. Some corporations have accumulated a lot of capital and they are just waiting for opportunities. Now is the time to exploit them.
6. Coming out of the crisis will be a gradual process
It is important to plan properly for the various stages of the global market recovery.
7. Invest time
It is important to invest time on identifying alternative sources of funding, such as crowdfunding, government-insured loans, etc.
8. Day-to-day flow management transition
This is the crucial time to determine the right steps to take and ensure that the company is doing as well as possible during the time of COVID-19.
Sources: InnovationManagement
