8 Tips on How Startup Companies Can Survive the COVID-19 Struggle
Being a startup company means you are still establishing yourself in the business world. With investors constantly looking to buy into potentially successful companies and overall seeking out areas to further the economy, it is surprisingly easy to break into the modern business world for the most part if your idea is viable in a financial, long-term sense.
Unfortunately, the onset of the COVID-19 pandemic has stalled the industry, leaving little room for new startups to gain footing and causing already existing ones to suffer due to the need for some investors to exercise contract cancellation clauses to protect their assets. It is a difficult time for everyone and a lot of businesses that are well established will not even survive, leaving many smaller startups struggling and scrambling for stability.
As Dan Rosen, Angel Investor Extraordinaire and Photographer, mentioned on a post regarding how startups survive during this pandemic, “Again, any step that cuts you burn early on, will have a lasting impact on the later cash balance and your cash horizon”. There are plenty of things you can do to help yourself weather this storm and come out ready to further your business venture. Let’s explore eight tips for how startup companies can survive the COVID-19 struggle and succeed to continue their business planning and investment relations.
1. Pause and Prepare
This point in our collective history is quite literally any startup’s worst nightmare. The economies are shaken and left bare-rooted, exposing them to potential long-term damage that could impact how we do business even after the COVID-19 pandemic has passed. There are a lot of businesses and startups that will not be able to make it through this, unfortunately. It has nothing to do with how good your idea is or how big of a dream you have; it is simply a harsh truth.
The best thing you can do to ensure your startup’s survival is to be realistic and look at the situation head-on so you can prepare for the potential struggles to come efficiently and effectively. This is not the time to throw out new ideas or try to market your business to tons of investors; right now, your goal is to survive until this is all over and then begin regular operations again as soon as the industry allows for it. Taking protective measures and working to set yourself up for a positive venture in the future will help to ensure you get to have a business to reopen at the end of the pandemic.
You can be hopeful and still dream of what will come once you can manage your business regularly again but right now, in the thick of things, you have to focus on curating a survival plan to ensure you can endure the tragic situations we are in and reopen as soon as possible for investments and other planning ventures. Sit down with your core team and make a strategy to keep you on track and ready to get back to things once it is time. This strategy should include a realistic budget for your company through this hardship and directly after and a plan for reintroducing yourself to the market effectively once it is safe to do so. Having this line-up will ensure you can come back stronger in the end.
Having funding is the key to keeping any business afloat. Even if you are not yet turning an impressive profit, you have to be able to pay your bills and overhead costs if you want to keep your doors open for any significant time. At the end of the day, companies do not die for no reason; they typically die out due to lack of funding or inappropriate crisis budgeting. To prevent this, it is important to curate a full, viable plan to keep the bare minimum costs covered through all of this.
Put a plan in place to help you plan out exactly where all of your money is going. Monitor your cash flow closely to ensure that you are only spending business money on essentials and have cut back on extraneous spending that will only serve to deplete your funding faster. Ideally, you will have good monitoring of your business’s finances in the first place that will make this easier but if not, it is a good idea to begin pulling receipts, bill documentation, and more or less anything else that routinely costs you money to allow you the best possible idea of how much you can expect to spend each month during the COVID crisis and immediately after.
Once you have this image of your potential expenses, it is a good move to have twelve months’ worth of money to cover all of the costs in place to allow you to still pay everything and prevent suddenly running dry and needing to fold the company. Hopefully, this virus will be resolved within a much shorter timeframe but since it could take some time to get back to normal even after the viral issue has been resolved or lessened to the point where businesses can safely resume as normal, so you will need to account for that extra time even if the viral impact is shorter than a year.
Having this funding covered will take a lot of stress off of your core team and allow you to plan your other moves for preservation without worrying about scraping together money or scrambling to cover bills and payments. This makes things easier from a financial and business planning standpoint and in ensuring your staff can handle the transition.
3. Expect Investment Caution
Your investors are going to look out for themselves before anything else. This means that even if your idea is amazing and you have a lot of options and interested investors knocking on your door, you can anticipate a downturn in discussion and planning as investors work to ensure that they can keep themselves maintained and safe through the entire COVID crisis, which impacts them negatively, as well.
During the COVID-19 crisis, there are a lot of good companies that will fizzle out and not get financed. It is important that you do not count on this investment cash flow to ensure that you can keep your own business afloat. You need to plan and budget for the events of this crisis as best you can on your own, as the investors will likely go on an indefinite pause to ensure their assets survive. If all goes well, the funding will go back to normal and you will once again be able to find investors and Angels to assist you in your business venture.
Remember that this investment caution will not go on forever, though, and that you should not lose hope. This will pass and soon you will be able to pitch your idea and get the funding you need; you just have to be patient and make a plan to keep things stable in the meantime.
4. Look at Technology
When you cannot open a physical storefront or otherwise conduct business, as usual, it can be difficult to bring in money, especially to the degree that you are used to earning under the typical business climate. This can be especially difficult for those with manufactured products whose clients typically come into the storefront to purchase items they need.
Fortunately, you can still sell your products if they are shippable or deliverable. The key to this method is moving to an online market. Offering your products for online sales can help you coast through this difficult time while still turning a profit, especially since many people are beginning to spend a little more, thanks to the CARE Act and its stimulus checks.
If you already have an online storefront, try notifying your regular clients of its availability. Contact them personally via phone or through email if possible and let them know that you have openings and availability online for any products, consultations, or other services they may need during this time. As long as you can safely do so, conducting your business online is a great way to keep yourself a little more stable until all of this passes, especially when used in tandem with preparative budgeting and other helpful survival techniques.
Considering alternative product manufacturing or service usage is another great tool that can be marketed online and help cast your business in a better light. If possible, use materials to create things that could be used in the COVID-19 crisis on a larger scale. For example, breweries and distilleries have begun to use their materials to create hand sanitizer which can be sold more quickly right now while providing a beneficial product for those fighting the virus. This also drums up positive public relations and makes your business look more caring and driven to help the community, which will help once the virus is over.
5. Government Help
The government has announced a lot of different ventures to help keep businesses open and people safe during this crisis. This is an unprecedented time and everyone is somewhat uncertain of how to proceed so these different venues of aid have been a welcome and refreshing bit of relief. Do not hesitate to apply for small business grants, low-interest loans, and other things to assist in keeping your business safe for the duration of the virus’s impact. Many options do not require repayment or are deferred until the virus is over with no penalty so you can help yourself by applying as soon as you can.
6. Stay Informed
If you want to stay ahead of what is to come, try keeping yourself as informed as possible during this crisis. There are a lot of different viable sources out there to help ensure you can predict what next steps you may need to take and form a plan to ensure your survival. While nothing can be said conclusively about the duration or impact of this virus on a long-term spectrum, there are plenty of helpful outlooks that have been provided based on previous pandemics and serious economic downturns that can play a very beneficial role in the formulation of your planning and preparation.
Do not rely on just one media source. Try looking at studies, figures, and facts about the virus without political input or sensationalized data. You want the base, core factual evidence to help you make the most informed and potentially correct plan that you can. This will help ensure that you are not forming your survival map on an unstable foundation and provide an overall easier and more potentially successful venture in general.
7. Consider Downsizing
No one wants to downsize their company and it certainly is not a fun thing to have to do but sometimes you simply do not have another viable option to keep your doors open. Downsizing is treated as a bit of a dirty word but it is a tool that can be used to temporarily prevent a company’s folding in times of extreme economic duress.
The survival of your company, at the end of the day, is the most important thing for you to consider. While there will be unhappy employees and less positive aspects of this maneuver, downsizing might save your business in the long run and ensure that you have a property to reopen once all of this is over. Just use downsizing wisely and weigh it against your other options before pulling the trigger.
8. Be Honest
Being honest with yourself, your clients, and your employees is the best thing you can do for yourself right now. There is no use in hiding potential issues and facing them head-on will help keep you out of hot water if things do end up taking a significant downturn. It is okay to say you are not okay and is morally and ethically a good option to save your relationships with those in your business network. Share the good and bad, whatever it is, where it makes sense to do so.
Survival and Stability
The two key things right now are survival and stability. At the end of the day, you want your business to survive this and come out still stable and able to function. Take any and every precaution you can and try to cover your bases to ensure you are going to come out of this terrible economic downturn that has been brought on by the COVID-19 crisis stronger than ever.