The coronavirus pandemic that paralyzed the world at the beginning of 2020. The aftermath was far-reaching, going beyond the spread of the virus itself and attempts to quarantine it, including political, economical, social, and cultural implications. The entire world woke up to a new reality and since then we all have been facing how vulnerable and fragile our global systems.
At the same time, we got an unprecedented chance for a global-scale reset – a reset for creating a greener, safer, and more resilient world. Innovations and digital technologies will likely be playing a major part in this transformation. We also know that the most important providers of innovation and new technology are startups, therefore their survival will be vital for the post-COVID recovery period.
According to The Global Startup Ecosystem Report published at the end of June by Startup Genome, layoffs among startups are pervasive, with just over a third of them able to keep their staff while the rest have been forced to send their staff on unpaid leave.
Furthermore, 4 out of 10 startups have three months or less of the funds remaining, which means that they will collapse if they don’t raise additional capital within this period. These companies are in the “red zone” and we have to admit that we are talking about over 40% of startups globally that might fold soon.
How can a startup succeed in today’s world? Are there any realistic ways that could help a startup to navigate a dynamically changing situation? Today we will look for solutions that could help you to survive as a business.
If you survive in the Covid-19 world – it will mean that your business is successful. Below we will share a few tips that may help existing startups and those who are just getting started in 2020.
Don’t be afraid of changes. Be innovative
The world we know so well is gone for the time being. There’s a chance it will never be the same, especially the world economy. This includes the gig-economy as well. Startup owners need to adapt to the new environment and adjust the existing business model to the new and unfolding situations. Whether it’s adjusting your business model from B2B to B2C or something entirely different, what’s important is that this change should help your startup to be part of a solution to the COVID-19 problem.
The fact is that millions and millions of people have been sheltering at home since last spring, getting accustomed to using the Internet for everything. Therefore, we are talking about an enormously huge market of potential customers that can discover your business online and order something from you.
And if you are thinking about starting a business – the rule stays the same. All startups should follow a simple path – it starts with offering people something that will make their lives better during this uneasy period; something viable and somewhat unique. The essential purpose of the gig-economy revolution was to find fast and reliable solutions to existing problems of different complexity. That means that you must be creative and innovative.
Make sure you know the market and your competitors
Study the market. Emerging technologies, the coronavirus outbreak, and the appearance of new ecosystems have created a very dynamic market that keeps changing with lightning speed. Being innovative is good but reacting fast is something equally important. Your competitors aren’t sleeping right now, they are out there trying to conquer the market faster than you. So, studying the market, learning what your customers need the most, and researching what your competitors are up to is vital for any startup.
It wouldn’t be a bad idea to take some online courses and learn about the latest trends and technologies regarding your industry. You might have already noticed that online courses come with significant discounts right now – why not use this opportunity and learn something useful from the experts?
For an entrepreneur who wants to create products that users are engaged with and respond positively towards and for anyone who is involved with the design, it could be a good idea to check out this particular course on Interaction Design Foundation.
Learn how to budget
As we’ve mentioned above, surviving as a startup today might not be possible if you are out of funds. Make sure you have the budget to last you for a while. Keep your expenses as low as possible and even lower than that. If it wouldn’t be for the pandemic, the majority of your capital would have to go into sales efforts, marketing, and product development. Otherwise, without the sales, you wouldn’t be able to survive long.
You still have to spend some of your capital, but you will probably have to sacrifice your salary and the salaries of your team members if you have any, and you need to forget about “being cool” for a while. Hopefully, you do have some reserves that you prepared for bad situations before starting a business and have some capital to fall back upon.
So, if you have money saved up or available, do not get relaxed and ambitious, and avoid overspending by any cost. Your business is all about generating revenue but it may take some time before you start seeing income. You should break down your financial goals into smaller realistic steps and follow these steps very carefully.
If you don’t have reserves, work hard on adjusting to the market requirements. Investors of any kind are interested in startups that show signs of profitability, not signs of helplessness and inactivity.
As of now, there are a few different ways of securing financing if you are opening a business, including:
- Getting a personal line of credit from a local bank (hopefully, you have a good credit score)
- Taking out a business loan (a well-developed and determining business plan will be required)
- Starting a crowdfunding campaign (people should be amazed at your creativity)
Besides that, you have to obtain information on any programs available in your area and offered by the government or large companies and designed to support startups during the pandemic. You may apply for financial help that will allow you to breathe while you are developing your product, marketing it, and scaling customer acquisition.
Prepare a business plan and a backup plan
Business plans are inherently strategic since you start with certain resources and capabilities that should be taken into consideration. Usually, you set a point between three to five years out. You’ll have to demonstrate that with the resources you have and the strategies you are going to implement you will be able to achieve some increased profitability and assets by this established certain point.
With Covid-19 around, it’s somewhat obvious that the business plans prepared in 2019 or earlier need some significant alterations. If you are planning on starting a business in 2020, you should make your business plan as detailed as possible. Your potential investors have to see that your ideas are right for the Covid-19 and post Covid-19 period; that people will engage with your product because it’s in demand, and that it’s better than the competitors’ analogs.
There should always be a contingency plan as well. According to the Global Startup Ecosystem Report, during the last few months, every 3 out of 4 startups have been experiencing problems with funding rounds. These funding rounds have been simply delayed or canceled for most companies.
If we take a look at the revenues, about 72% of startups have experienced a revenue drop since the beginning of the outbreak, with an average startup seeing a decline of 32%. Only 12% of startups are experiencing some growth.
Having a contingency plan is a must, and if you have a business plan ready and looking for investors, do not hesitate to demonstrate that you are prepared for the challenges of an unexpected and disastrous matter.
Also, make sure that you have a comprehensive Investor Agreement that includes all of the basic details you need to attract and impress investors with your skillful handling of their money.
Figure out your marketing/advertising plan
Having a decent website for your product is a must, but utilizing social media networks for marketing is also a necessity if you want to survive as a startup during Covid-19. Increase your online presence on social media platforms as much as possible and do it by directly communicating with people.
Therefore, being a startup, you will be able to gain your target audience’s attention if you employ certain techniques such as inbound marketing. Sadly, old marketing tactics aren’t effective enough in today’s world. If you aren’t familiar with inbound marketing yet, we recommend reading this comprehensive guide that will help you to figure out a successful marketing plan to implement when the time comes.
With emerging technologies, it is much easier now to reach your target audience in a low-cost and highly effective way, keep people engaged with content that they truly like. Also, you shouldn’t ignore email marketing as a part of your marketing plan. We are not persuading you to send out boring emails that will end up in a trash folder. We suggest using advanced email marketing automation solutions that are designed to help with creating advertising campaigns that deliver.
Put a team together
Most likely it won’t be just you working on the startup. Find people that you trust and want to work and collaborate with. Finding the right people and keeping your team motivated isn’t an easy task, especially now. A weak team will sink your business and that’s why it’s imperative to choose the right members.
You can start by analyzing what you are good at, and what you are not proud of, evaluate your skills, and start looking for people who can compensate for what you lack. You can do it through LinkedIn or hire a professional recruiter – the main thing here is to avoid the risk of bringing the wrong people in.
Act professionally, otherwise, it will be your startup’s fiasco. Helping unemployed friends or relatives is a good thing but you don’t bring people in your business just because you feel sorry for them. Someone that you haven’t thoroughly evaluated might not last anyway, but you are risking your resources, your customers, and your reputation. Just follow the golden mantra “hire slow, fire fast” and you will not have to waste time and money cleaning up a mess created by a poor fit.
Start working on your product
Whatever your product is, once the work begins, there’s no turning back. Be committed to the entire process. Product development is no walk in the park. It involves several stages and lots of prototypes before the final product is revealed. It’s important to consider each stage, from market research and analysis to studying your competitors’ products and figuring out what makes them successful.
Essentially, your product needs to go through several reiterations before it’s finalized – and this process could take anywhere from months to years to perfect. While fast prototyping is a thing, you need finances and manpower to back it up, and if you’re a new startup, you might need to take the longer route. It’s also never too early to think about raising your brand awareness. The faster you figure out your branding, the better.
Making sure your startup succeeds in 2020 is a difficult task with lots of things that can go wrong. It’s important to remember that while this year hasn’t been the best one for businesses, quite a few startups are thriving and you could be one of them. Just keep your head high and follow through with your business and marketing plans, figure out your product development process, and dive in.
Darya Jandossova Troncoso is a photographer, artist, and writer working on her first novel and managing a digital marketing blog – MarketTap. In her spare time, she enjoys spending time with her family, cooking, creating art, and learning everything there is to know about digital marketing