It is not surprising that the global pandemic COVID19 has hit the economy worst. While some businesses have successfully managed to ride out the recession, the others have failed to come to grips with it. According to studies, start-ups have faced the worst hit due to the invisible threat. It is expected that 41% of start-ups will be out of cash within the next three months. Despite having a backup plan, start-ups are unable to bear up the ramifications of the economic recession.
While there are several reasons for a start-up to go downhill, but now the most common reason, according to start-up founders, are “the market is not ready,” “the product is not ready,” and “they are continuing to burn through cash”. Well, you are not alone who is going through this pain. You cannot go back in time to reverse the current situation, but you can plan how you have to tackle this.
Many of you will likely give up in the middle, but this is the time to unravel entrepreneurial skills hidden inside of you and prove that you have the potential to move forward. Here is what you should do as an entrepreneur to bounce back from failure.
Identify prospects
If you feel that your start-up is shattering, being stuck to the approach you have been using to date may not be a good idea. This calls for reconsidering your goals and strategy. You should ask yourself if it is the right thing to continue. If you feel there is light at the end of the dark tunnel, you will likely carry on what you have been to date.
However, you can think about pivoting the company’s focus.
- What could you do to hit the ground running?
- What do you need to restructure your organisation?
- What do you need to do differently?
Of course, you have to make a deliberate move to avoid risk. If you find an excellent opportunity to invest, lack of funds should not be the cause for not taking the initiative. The availability of funding sources like loans for people on benefits can fill the gap.
Be considerate with your clients
Investing in a new project means spending money on advertisements, and you are already running out of money. Further, there may not be much demand for that product. It means it is worthless thinking about new projects to keep your business on track.
A good rule of thumb says that you should be in touch with your current clients. Since the entire nation is going through the impact of COVID19, you cannot expect to be inundated with multiple projects. Everybody would like to save money because everyone is in a tight spot at this critical time.
If your clients are negotiating with you, you should hesitate if you can still make profits – after all, something is better than nothing. Try to focus on “Something” instead of “Everything”.
Be ruthless in controlling operation cost
When you are running out of money, you would like to keep the operation cost as minimum as possible. While you have to request your clients to pay invoices as soon as possible, you need to figure out other alternatives to save your money. For instance, allowing your employees to work from home can be a better option because you will save on electricity bills and related expenses.
However, it does not mean that you will not keep an eye on their performance. As your business is going downhill, it can be hard to keep up with salary payments. Try to convince your employees to work on a pay cut until you bounce back.
It is crucial to make employees understand that the business is in the dark, and therefore, the company has decided to cut salaries. At the same time, you need to encourage them to maintain the same level of productivity. Otherwise, more conflicts will arise.
Seek help from investors
Regardless of the circumstances, you can consider taking help from investors. Although it may not seem to be a sound condition for investors to invest in your start-up, they can be willing to contribute to your business if it appears to be giving the necessary output after financial support. There is nothing wrong to ask for help from investors.
If your start-up seems to be failing, you do not need to give up in the middle. The nature of business is dynamic. Every business sees hardships. It is up to your potential how you manage to withstand these challenging circumstances. Like other situations, it is also a temporary phase. This time you need to be patient and strategic to achieve your goals. Follow the tips mentioned above to survive even during the economic recession.
