OFF TO A FRESH BEGINNING: Post-pandemic survival tips for start-ups

Even as countries scramble to battle the unseen enemy, the question lurking on everyone’s mind is – what next? Will sanity return? Can we be normal again? What about businesses that drive the world’s economic engine? Specifically, how should start-ups deal with the aftermath of this pandemic?

No one really knows. As an entrepreneur for over two decades, I have survived two downturns. The first crisis was the dotcom bust in 2000 followed by 9/11. The second one was 2008’s global financial collapse. This time, it’s different. In the earlier downturns, money became scarce, capital availability was hit, businesses went down, people lost jobs and many sectors took years to recover.

All these will happen again, but additionally now people are dying. By the time we recover, millions would have perished directly because of the virus. Millions more could succumb to hunger. Despite assurances, we must brace up for the long haul as this recovery won’t happen in two quarters – but more like two years. None of us have faced anything like this epidemic in our lifetimes. So, when anyone shares survival tips, read it with a rider.

This too shall pass: Good times never last, but neither do bad times. Rest assured, we will get over this.

Downturns are great reset opportunities: In good times, startups, especially well funded ones, get into bad habits – high advertising spends, trophy hiring, bloated head counts and ill-conceived expansions. A crisis is a great time to correct these and get the business back on a sustainable track.

Change organisational structure: When things are normal, 60% of your staff is engaged in roles that directly or indirectly bring in revenues. In hard times, this should be 80%. Collaborate with other startups and share support services like finance, HR, administration – roles that are suddenly not as critical. It keeps costs down and you don’t have to let go of more staff than required.

Communicate: If you are concerned, think about your employees, they have no idea what’s going to happen. If you must let go of people, do it with sensitivity and fairness. You can keep people on rolls with zero salary until they get another job. In times like these, corporate medical insurance cover is invaluable compared to salaries.

Focus on cash flows: If you have to drop margins in exchange for faster or, even better, advance payments from customers, go for it. Margins are on paper, cash is in the bank.

Check your runway: The next round of funding will take longer to close. If your money will last less than six months, you could be in trouble. Do everything to make this last a year or more. Renegotiate everything and anything. The lockdown has taught the world that at least half the money we spend is on stuff we do not require. This is true of small enterprises too. Ask yourself – why do we need an office at all? Why can’t we work from home? Meet twice a week at a co-working space or a coffee shop. That’s a big saving.

The writer is a serial entrepreneur and co-founder of Again Drinks