How startups can navigate through this period
There is no question that these are unprecedented times, incredibly difficult for everyone mentally, physically, socially and economically.
For any new business that started out in the past 6-12 months, the spread of coronavirus and its impact is highly unlikely to have been a part of any startup’s risk analysis or disaster recovery plans.
The way we socialise, work and teach will change dramatically as a result of this catastrophe. The key now for any business is not only survival, but how can they adapt to help others?
One of the most important things is to ensure that when we are through this crisis, the business is in the best possible position to resume. Having a strong control of the finances and ensuring that any runway for funds is extended by making the best of your resources and making sure every pound, dollar or euro you spend counts. Ask landlords and suppliers if they can reduce their billing temporarily. Ask for interest payment holidays and extensions on loans. Take advantage of all that the government is offering to assist.
Don’t forget all your internal and external stakeholders too. They are part of your network and are an important source of advice. Investors, non-executives or others that have supported you in past or even current funding rounds should be tapped into as some may have been through a similar crisis and be able to provide the guidance needed.
Some companies may have to reduce costs by laying off staff, paying them a reduced salary, but other companies may take a completely different approach. They may realise that some staff play a key role in the business, going out of their way and giving their all for the company. These people deserve to be more looked at as a partner of the company rather than a worker, therefore could get offered options with a reduced salary, which may even end up increasing their output during these hard times as well as reducing the company’s monthly outgoings and overheads.
If you were readying for the launch of a new product, in the middle of a funding round or even looking to expand through recruitment, then clearly that will all be impacted. Whilst the months ahead will be tough, something to be thankful for is that this virus outbreak happened at a time when the economic backdrop was very strong.
This will hopefully mean the recovery is swift and it won’t be too long before hungry investors looking to back good businesses will allow funding requirements to be fulfilled, meaning all the new products and jobs that have been put on hold will begin to flow again.
Some startups may be in the fortunate position to be able to continue conducting their business and use their solutions to help people even more than normal. For example, online exercising classes have also seen celebrities made of personal trainers and there’s been an explosion in online teaching and learning, something that is at the core of what Xcademy does.
Looking at the positive sides, a lot of people will have a lot of time on their hands and there is no shortage of good quality e-learning content or EdTech solutions that will help people. People can re-educate themselves as well as learn new things, such as another language or new life skills like how to build confidence or communicate better.
As the timeless phrase goes 'cash is king' and managing cash flow through this period is the most critical element to survival. With new investment pushed back for the foreseeable future, if you are in a fortunate enough position to look at improving cash flow, then every effort should be made to do this.
For example, adjusting subscription offerings is something we’ve done at Xcademy, as well as providing a great deal of our content for free during the lockdown period. We are very scientific in analysing the results from small incremental changes, with the aim of preparing us for the recovery when it comes.
That recovery may seem a long way off, but when we are through this extraordinary period, it will have arrived and the UK will remain a prosperous breeding ground for innovative startups.