Thrive, Not Survive: How Startups Can Survive the COVID-19 Crisis
With all of the new processes and procedures COVID-19 has forced both businesses and individuals to adopt, it has also brought about a lot of uncertainty and an economic landscape that’s lagging, to say the least. For most startups (and let’s not forget their stakeholders), this crisis will continue to bring about new challenging hurdles.
And while the cards may appear stacked against you, that doesn’t always end up being the case. After all, many great startups have been created during economic recessions. Just look at Microsoft, Mailchimp, and Uber. If you can challenge yourself, your staff, and your stakeholders to see this as an opportunity for positive growth and change, you’ll be most of the way there.
From my experience in the startup world, I’m sharing some tips on how you can thrive, not just survive, during the COVID-19 crisis and beyond.
- Overcommunicate with Your Team (and Don’t be Afraid to Share the Bad News!)
My first tip is to overcommunicate with your team. During a crisis like this, it’s crucial to stay connected to your team and communicate with them on a daily basis. You can do this in a variety of ways, such as:
- Sharing daily updates via email
- Creating a Slack channel
- Meeting on Zoom or another videoconferencing platform
- Setting reminders in project management apps like Asana, Basecamp, and Workfront
The most important thing here is to focus on communicating with your team—in whatever means necessary. Don’t cower away in fear and hide from the situation. Show your team that you can deal with a crisis by being proactive and getting out in front of it as soon as you can.
It’s also wise not to be afraid of being vulnerable and sharing bad news with them. Whatever the situation, your team needs full transparency and must know exactly what’s going on with the company.
- Set Your Team Up to Be Successful
Since much of the country is still unable to work in their offices, it’s vital to set your team up for success by finding solutions for them to work and communicate remotely so problems can be resolved. If you don’t have a project management system in place yet, invest in one. Tools like Zoom, Slack, and Google Hangouts can also be very effective for improving communication and collaboration when working remotely.
If your team isn’t set up to be successful, they won’t be. It’s as simple as that.
- Put Your Company to the (Stress) Test
One helpful way to determine the likelihood of your company surviving this crisis is to put it through a stress test.
The formula is simple. Take the recurring revenue you have this month and cut it down by a third, assuming that it’s all the revenue you’ll have for the entire month. Then, review your expenses and consider this new revenue rate over the next eighteen months. Ask yourself, is this enough for my company to make it through this crisis?
If you have at least 18 months of revenue left over (more is great too!), you shouldn’t need to do anything severe. If you don’t have that much cash, you’re going to have to start making some adjustments. These could look like:
- Making layoffs
- Making frugality one of your company’s core values
- Hiring contractors instead of full-time employees (where possible)
- Mastering SEO to reduce your customer acquisition cost
On top of cutting costs, you’re also going to want to increase the runway that you do have, however you can. If you have access to a line of credit, pull it down before you need it.
- Evaluate What’s Working vs. What Isn’t
This should go without saying, but it’s critical to your long-term success that you evaluate what is and isn’t working at your company.
To determine if something isn’t working as expected:
Look to your competition. Ask:
- What are they doing?
- Have they shifted their direction or altered plans?
- Are they one step ahead of you? Two? Three?
Talk your employees.
Arrange one-on-one discussions with them and encourage them to speak candidly and provide honest feedback about what isn’t working. After you’ve talked with everyone, identify any trends and patterns, and then solicit feedback. While the idea of a suggestion box may sound outdated, there’s a reason it’s used: it works!
If something you personally decided to try isn’t working, admit that you made a mistake.
If something isn’t working due to the current state of affairs, get your staff involved in coming up with a plan that will work.
- Shift the Direction of Your Startup
After you’ve evaluated what is and isn’t working, you may find that you need to shift the direction of your startup. This could mean shifting what products you sell (as in transitioning to online-only products and services) or shifting to a new industry entirely. These types of pivots aren’t new for many startups—and if you’ve been a company long enough, you’ve probably experienced some of them yourself.
Here are my tips for shifting the direction of your startup:
Look at innovative, young startups in your sector.
- What are they doing?
- Why are they doing it?
- Are there new niches developing that you could benefit from tapping into?
Analyze the behavior of your customers.
- What does your feedback look like on social media?
- Are your products or services still relevant?
- Ask your sales team for insights and data on what your clients are looking for.
Determine whether (or not) you actually have the resources to make this shift.
- Be sure that you manage any new costs that will arise, such as new technology, new staff, time, etc.
- Keep marketing to your existing customers while reaching out to new prospects simultaneously.
- Explain the shift in direction to your current team and determine who is on board and who is not.
- Create a detailed action plan that includes available resources, cash-flow, investments, and an analysis of the market.
- Put a Pause on Hiring
If you think you’re immune to the economic impact of the COVID-19 crisis, think again. Whether you choose to believe it or not, the economic impact due to the crisis will have an effect on every single company. The safest play here? Assume the worst.
Even if you’ve been lucky and seen an increase in revenue or a reduction in costs, don’t be fooled. It’s just a delayed reaction. So no, don’t go hiring anyone new during this time. Wait until this blows over, reevaluate your needs, and then decide who to bring on.
- Think of Creative Solutions
Sure, the COVID-19 economy will affect your business, but it doesn’t have to be for the worse. I think it bears repeating: If you can challenge yourself, your staff, and your stakeholders to see this as an opportunity for positive growth and change, you’ll be most of the way there.
Even with some states relaxing their stay-at-home orders, many people feel unsafe and skeptical about going out, so they are continuing to say home, and thus are spending a lot of time (and money) online—myself included.
If your business is a direct-to-consumer one, or even B2B, but you can transition to providing some of your products and services online, figure out how to make it happen and do it. It will surely take some ingenuity and creative thinking on your part, but it will be well worth it in the end if it results in additional sales!
About The Mindful Mentor
I’m an inspirational coach and thought leader who teaches and encourages mindful entrepreneurship through a unique blend of mindfulness and business strategy. By helping both aspiring and experienced business leaders balance the personal and professional, pursue passion projects, and gain greater perspective, I support talented professionals in developing and sharing ideas with their communities.
Let Me Help You Thrive!
Still feeling shaky about leading your startup through the rest of 2020? If you need coaching for startup success, don’t hesitate to get in touch. I want to help you and your startup thrive—not just survive—as you navigate beyond the COVID-19 pandemic.
To learn more about what drives me and the services I offer, contact me and let’s chat.