Harshit Bapna | KD VenturesCo-Founder Inocorn | Industry Interface Head at E-Cell, IMT Ghaziabad
This phrase, being used for decades if not centuries, has become more relevant than ever before in the current Corona Pandemic times. A catchphrase used by experts, critics, veterans, etc. when one fails to flag the check post. While the ones on the other side of the barrel settle amused by the saying, wondering what went wrong and when exactly they failed to initiate their emergency protocol.
Our take here is not about looking at the extent of crisis preparation in retrospect, rather a due reflection on Winston Churchill’s famous quote, “Never miss a good crisis”.
The same pandemic that disrupted the status quo of the world also managed to provide a buffer time (popularly known as lockdown) to prepare for what lies ahead. Plenty of information is compiled and shared on a minute by minute basis on the extent, impact and after-effects of the pandemic. While corporate giants may take a year or two to settle for robust demand and supply-side conundrum, the survival of MSMEs, start-ups, etc. operating at razor-thin margins, lean teams and resources remains an uphill battle. Most of them have an extremely thin cushion when compared to their giant sisters and brothers and rely on loans, venture capital, family or traditional market debts. With the current economic and global uncertainty all of these sources of funds have stricter policies and have tightened their pockets to support small and new enterprises.
Entrepreneurship itself is considered a game of daily challenges, difficult trade-offs, and extraordinary leadership skills. Having said that, these challenges mostly used to be gradual and needed small fixes to keep the engine running. However, the current pandemic has ruthlessly attacked the ongoing business models of many of these startups. Some came out strong and began their transformational journey, with more yet to join the bandwagon, and the remaining may rest for good, amused, and startled, as mentioned above.
One of the most critical success factors for startups who managed to battle the challenge was ‘timely gear shift or even a pitstop to rewrite the path to their destination’. Keeping survival in mind, we jotted down some pointers from our observations of what worked well for some and just might work for others in the coming months:
Better managing and controlling cash burns
With uncertainty over how market economics will play out in the coming months and newer roadblocks against Chinese funding, startups are seeing a massive challenge in managing their current accounts. Entrepreneurs must shift their focus from valuation, revenue-based forecasting to cash flow and profit margin based forecasting.
Identify newer sources of revenue
While the pandemic has pushed almost every king to the corner of the chessboard, the queen and bishops have managed to create their own symphony. While the existing revenue sources and models may have been severely impacted by the pandemic, many startups have managed to transform their business model to generate revenue from newer and more sustainable sources. For instance, startups in the sector of healthcare, education, entertainment (OTTs), fresh supply and food (cloud kitchen, grocery delivery, etc.) have managed to carve out their own silver lining. Most of them have leveraged the new modus operandi of either expanding or transforming their current value propositions.
Another revenue stream may emerge from sector expertise and experience of these startups. With the uncertain ecosystem and increasing customer expectations, the demand for technological transformations, AI-ML based business models, RPA based operations to cut cost and create a pull eco-system in the market is increasing faster than ever. In this context, startups struggling in their current sector, having expertise of creating and running similar tech-enabled domains, could help each other in realising their needs. It is like side hustling for an existing hustler.
Manage productivity in the era of remote work
Social distancing is the new normal, and this will probably stay longer than any of us are predicting. Employers are likely to extend their work from home timelines even once the pandemic is under control, considering cost-cutting perspectives. Collaboration tools and techniques are bound to play a major role and leaders are now pressed more than ever, by the need to enhance productivity without falling into the trap of micro-management. A tailored approach is supercritical in this context to establish processes, practices and ways of working within respective organizations.
Raising new money
Raising fresh capital is going to be the biggest challenge for some time now. We have already seen many well-established startups collapse in recent times as their funding dried. In such a situation, the most optimal use of current cash is extremely critical. While startups are pressed by accumulating cots and no or low revenues, rushing the burn of available funds might further reduce the value of the entity, creating a dent in the existing investors portfolio as well.
A dedicated focus, beyond day to day firefighting of challenged operations, is required from founders for raising new money. During and post pandemic business models, investment options and growth plans are required to be prepared, detailed and carefully validated. Startups may also look for debt funding, keeping the trade-offs in mind, to avoid getting knocked down in the short run.
We are no astrologists, nor the article above is a one size fits all formula. Most of you are already facing the heat of the moment and most likely are on the path of transformation. Rest who are preparing to start must have been preparing their notes for some time now. We just hope that these few pointers provided above result in the trigger or acceleration of the change you and your venture needs the most at this moment. As a closing thought we would like to revisit that very old and famous quote from our cricketing world-
“Form is temporary but Class is permanent”
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