Almost every startup in the US at present is affected adversely in the wake of the corona pandemic. However, it depends how much the pandemic will affect you as a business entity, given the industry sector you belong to. Besides, the other big factor that decides your fate amid the ongoing crisis is the position you were in, financially, at the time the virus first came in.
At the beginning of the crisis, the optimistic startup investors made quick plans to fight the economic impacts. They developed decision matrices and action plans that were focused on cost-cutting and hiring-freeze. Everything that can help survive the business was thought of, and the actions were taken accordingly. New business strategy frameworks were developed to keep the business intact amid the economic downturn led by corona.
Kaszek Survival Guide and Sequoia Matrix were taken into consideration by the startup founders to neutralize the impact of the pandemic. However, what looked more promising is the Kaszek Survival Guide.
Let’s take a look on what it says. The business strategists working in startups must take note of this.
Kaszek Survival Guide
These are the precautionary measures you can take as a business owner as per the kaszek guide to safeguard your business from the adverse economic impacts of Corona:
- No new capital will be made available to you in the next several financial quarters. So, get yourself prepared for it.
- Stop investin gin your business expansion plans. Concentrate on your core business specialization and simply stop working on any of your other initiatives taken in the past.
- Go on a complete hiring halt. Lay-off all low-performing human assets. Try to leverage the maximum out of the limited number of employees.
- Cancel any sort of bonuses if you have been offering them to your staff for years in the past. Brainstorm on how much percentage of employee salaries you can afford to cut down on, for the several months that will follow.
- Eliminate all kind of perks and international travel allowances. Just the basic essential salary until the situation comes back to normalcy.
- Anything and everything can be renegotiated keeping in mind the sudden adverse impact of COVID on businesses worldwide. No contract should be treated as sacred. Terms of work with every supplier (media, tech, supplies, rent, tech) can be adjusted as per the new normal.
- Invest strategically only in those channels that can payback in quick time. Get rid of the spending on marketing and sales for the time being. Gauge your position as a business, economically, on a daily-basis.
- Keep yourself away from the product lines that contribute negatively to your business.
- Get your liquidity game strong. Strive hard to get receivables at the earliest possible. Delay the payments you need to make to your vendors and suppliers. Make every effort to maintaining your operating cash flow and company balance sheets.
- Show your leadership skills. Make tough decisions, that too, quickly. Any kind of delay can result in capital losses of a certain degree and value. The ongoing crisis times demand of you to be safe as a business, rather than being sorry, eventually.
Critical Questions That Startups Need to Address Going into an Epidemic
- The amount of cash they possess going into a pressing situation like a pandemic.
- Are the employees being able to work from home comfortably?
- How suitable is the current business model to fight the economic atrocities of the pandemic?
- How severe has the industry been affected in which the startup operates in?
Going forward, the coming times will pose even more pressing challenges before the startup founders than it had ever before. Those who have survived until now, must prepare for the new, longer term economic challenges awaiting them.
The only solution is to keep adjusting the strategy as the situation unfolds, and wait until the crisis ends. Till then, take some tough decisions, make some surprising and big changes in your strategic plan, and try to keep the business afloat.
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