Until the COVID-19 pandemic is over, survival has to be the imperative focus for startups.
The pandemic is very different from the financial crisis in 2008.
In fact, some companies are hiring.
Challenge No.
1: Cash management
First, the biggest issue most startups face is cash management.
Such thoughts give rise to a fundamental question: how can startups survive during this period?
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Companies need to prepare forfurther lockdowns.
Preserving cash for this period is crucial for several reasons.
While most investors honor deals,some may not.
Furthermore, the market for investments has also shifted.
Valuations are down significantly, so getting money into the business is, and will be, increasingly difficult.
Additionally, certain opportunities for generating cash short-term have frozen up.
For the next 18 months, the goal is to see to it they can stay afloat.
Challenge No.
The stock market has already crashed,but may go further down.
Startup valuations have become more conservative as well.
It is harder to attract funding and companies trying to raise money likely lose even more equity.
During the financial crisis,returns were typically more than double in comparison to less volatile periods.
Challenge No.
3: Leadership complexities
Third, leadership has become more complex.
Transparency and honesty about the situation is key tobuilding, establishing and deepening trust between management and employees.
Dealing with emotions is as important as showing empathy and making people feel connected.
It is important to stay true to values and vision.
Coaching can contribute towell-being, prompt self-reflection for business leaders and help in making balanced decisions.
Having to lay off key employees is a traumatic experience.
The labour market for top talent is still active.
This crisis is selective, affecting some companies hard while others thrive.
This is a further reason for startups to act very strategically in cash management for the next year.
Challenge No.
Challenge No.
5: Consider pivoting
Fifth, pivoting your business model is something to consider during these changing times.
We have seen 3D printers being reused for protective equipment anddistilleries producing hand sanitzers.
It is during crisis that responsible management practices and fair stakeholder treatment is especially visible.
Making decisions quickly, transparently and equitably will go a long way.
