This pandemic has been harsh on the economy. The economy has suffered great losses at the hands of the virus outbreak. Many start-up companies are brought to a point of shut down. The logistics industries are seeing its worst days. Almost fifty percent of the 12.5 million large, medium, along with smaller commercial vehicles are forced to shut down their engines due to the coronavirus outbreak.
There are no loaders, no divers, and no un-loaders, to provide support to the $200 billion of the logistics industry. Research says that this COVID-19 situation is not going to be any better any time soon, so it is better than India buckles up its supply chain system and go forward in being completely digital. The government has done its part by forming a logistics committee and now it was time for the companies to go into action in scaling the logistics responses towards COVID-19 for days to come.
The societal and human impact of the coronavirus outbreak will be immense and even though we seem to be in an early stage in to, India seems to decline every day. We are at a stage where we cannot prevent the virus from spreading and it is going jeopardize every community and every sector of the society. All we can do is to come up with ways that can hold on to the economic balance.
5 tips in which start-ups can survive this pandemic
It is said that many great start-ups are often created at the time when the market is facing its downturns. Survival is important. It is obvious. If you fail to survive, there is no point in being upside. The most important and the primary thing for a company is to survive. Therefore, every point that is being discussed below is about the survival of your company. You need to put away all your glory plans of becoming a great company and just focus on surviving at this point. If you don’t survive, then there is no point in molding your business into something great. However, it a lot easier said than done. Let us get into the suggestions that might work out for start-ups:
Cash holds the primary importance
Mainly start-ups tend to shut down not because of lack of plans or ideas, but mostly because they run short on cash. It is very important to formulate a plan that will keep your cash intact. You need to put a hundred percent effort into this plan. You need to very aggressive on the plan and you need to act quickly because early action will be way more impactful than the later actions. Make sure that you have enough cash for at least 12 months and you are going to need it anyways. Even if the virus situations get better, its turmoil will persist for a long time especially for start-ups.
Do not focus on raising money
Investors will invest in the companies irrespective of the situation. However, they will expect a much smaller round which comes in smaller valuation, and in such companies that don’t need huge amounts. Funding of the existing companies is most likely to stall due to the sudden market downturn coupled with business disruptions. Even if the investors and VCs continue investing money, it will trigger the triage mode that is the investments will be done in selected companies only. Due to this mode, many good companies will also lack in finance. You can almost assume that this situation will persist even after the COVID-19 outbreak, and due to this M&A is most likely to be dried up. If you get lucky, then you can expect some angel investors to invest in your company but that too at a huge price and this will be possible only if you can last your money this long. You should always be transparent and prudent with your shareholders in these situations by communicating them with both the good and bad news.
Revenue might be curtailed
In this time most companies, small businesses, as well as the government clients, will enter into the survival mode. If you are providing with service or products that are needed or are mission-critical, you can estimate that your revenues will defer for at least six months minimum. You can expect some of your cancellation clauses to be exercised if they have cancellation clauses attached to them.
It is a very difficult decision but it is also inevitable. As we are at a point where survival is at stake, many companies have to go back to just the essentials. If the companies need to survive, the salaries have to be slashed to at least fifty percent of the original amount. You need to cut all the contract helps that is possible to be cut. Cut the sales and marketing spend until your consumers are back to their normal lives are willing to buy once more. You need to remember that any cuts that are made early will have a lasting impact than the cuts that are made later on. This influences your cash balance and your cash horizon as a whole.
Stay alert about the inflection point
Like everything in life is very unpredictable, so in this situation. However, as almost all bad situations, this shall pass too. It is difficult to visualize what the market and the country will look after this whole outbreak is over. Nevertheless, if you are a company that can survive this, there will be huge opportunities that are awaiting. All you need to do is survive, and the rest will be assured.
The pandemic has brought down the economic crisis and all we can do about is turn the current situation to our advantage. The above suggestions can help the companies in their survival trait. You need to remember one thing, that making money is not an ideal option now. You mainly need to focus on surviving.