Authored By: Dr. Vivek Bindra, Founder & CEO, Bada Business PVT LTD
While all the nations are grappling with this pandemic as a global health challenge, the COVID 19 crisis has also brought in its wake an unprecedented economic challenge for this generation. With most economic activity put to a halt, a large number of organizations are currently surviving in a zero-demand scenario and struggling to survive. For startups and smaller organizations, the challenges are even greater as revenues fall and sustainability becomes difficult. The Startup Association of India (SAI), an industry body representing startup interests, has sought a Rs 25,000-crore fund to help them tide over the liquidity crisis.
While the situation is challenging, there are ways to curtail losses, bring about a balance in cash inflow and outflow and stay profitable during this crisis. Adaptability is the key. Here are some tips that might help:
Ø Regulate cash flows strictly
With revenues set to shrink, startups must prepare for a decline in cash inflows and take necessary measures to prevent themselves from going bankrupt. Cash is of vital importance to startups and they need to put in place an aggressive plan to conserve it. You must aim at having at least one year of cash reserves. Keep a tab on all cash flows in and out of your organization and conduct a thorough analysis of the same. Divide the expenditure heads into ‘indispensables’ and ‘expendables’ and start cutting the latter. Rent out a smaller workplace; cut down marketing and advertising expenses. Minimize hardware expenses, ask employees to use their own computers/laptops, put off appraisals and bonuses for the time being. Curtail expansion plans. If you have offices in multiple cities, consider closing some of them.
Ø Go virtual
This might also be the time to say goodbye to the concept of the workplace as we know it. With social distancing measures expected to stay on for a considerable period of time and work from home becoming the new norm, you might consider going completely digital. Eliminate the need for a physical workplace for a few months and ask employees to work from home for the foreseeable future. This will save you a lot of cost on office rent, office infrastructure, office services as well as electricity and water bills.
Ø Find innovative ways to trim down costs
Often, a lot of expenditures we undertake can be trimmed using intelligent processes and shifts in business methods. For example, if you outsource some of your work such as social media or digital marketing or content creation, it might be time to quickly create an in-house team to do the same going forward. Identify the people you deem appropriate to take on these responsibilities and quickly train them in doing these jobs. Since you are already paying your employees, this will save you additional costs. Over time, this team can grow into a full-fledged department which might also start getting work from other sources.
Ø Innovate products and fill opportunity gaps
Now is also the time to study the market and find “hidden” opportunities that you might exploit. Dedicate your innovation team to find novel solutions that can be helpful during these times. Find innovative ways to serve your customers during this period. To cite an interesting example, China’s largest e commerce company JD moved quickly during the pandemic to start making drone deliveries in sealed areas. Since a lot of people are staying at home, there is increased demand for online learning modules, gaming, and work from home tools. In these new opportunities and your ability to adapt, lies the key for survival.
Ø Embrace automation
Automation of low-skill manual tasks such as customer calling can help organizations further trim their workforce. It is therefore important to adopt digital tools that automate a series of daily jobs and allow you to pare down costs to bare essential levels. Over the long term, shifting from manual processes to automation also helps in effectively manage multiple stakeholder relationships – be it with vendors, consumers, suppliers or distribution channels – with greater efficiency.
Ø Create differentiation for your product
Use this period to launch an aggressive exercise to re-package your product or service and make it relevant to the time. Increasing engagement with all stakeholders including customers is also an essential strategy element during the time.
We all know the tide is tough especially for startups and small players, but the one who swims through this tide will be able to withstand any business calamity in the future.