What a beginning to the decade! We have come a long way from the enthusiasm I remember from the last night of 2019.
On one hand, optimists say this is an ideal time to start a new business; on the other hand, more than 30 million people have lost their jobs during the COVID-19 pandemic in the US. In months, the combination of a public health disaster and economic crisis has completely transformed our way of life.
Since the beginning of the pandemic, I’ve been receiving many e-mails from tech startup founders on topics like fundraising support. In response, I’ve discussed the situation in depth with a handful of expert founders and leaders, and I’d like to share some of our conclusions. As a cautious optimist, I believe there is still a path to move forward; but optimism must be paired with acceptance, strategy, and tough love.
By now, you’ve probably gone through the dejection, the panic, the feeling of paralysis, just as I did. You’ve probably gained weight — no worries, my friend, we all did — but hopefully, you’ve also gained a sense of clarity about the situation and about your own strengths. Crises have a way of teaching us what we are capable of.
Now is the time to buck up and accept that this is not business as usual. Now is the time to define what our “new normal” means for your business.
Part of this will be conducting a realistic analysis of what is possible for your business. Like many, you may realize that you cannot meet your original goals — and that’s okay. Accepting what isn’t possible is an important part of building resiliency, and it’s the first step to redefining your goals to fit the new normal.
For the foreseeable future, many startups’ new goals will have to be survival.
Focusing on growth is a standard for startups during a healthy economy, but during a serious economic crisis, your company’s growth might have to be put on hold. In these conditions, long-run survival may require some short-run sacrifices.
Firstly, your long-run plan won’t succeed if your cash supply will only last for three months. In most cases, the first way to increase cash on hand is means cutting your burn. If you have not done so yet, now is the time.
Shaun Abrahamson, Managing Partner at UrbanUs, shares,
“We have set a goal for each company to have at least 12 months of runway. Mostly this means 25% – 50% reduction in burn.”
Finding ways to reach that 12-month cushion might involve some tough love, including pay cuts across the board or even layoffs. When survival rather than growth is the immediate goal, however, these kinds of difficult decisions are put into perspective.
Now, during a crisis, is also the perfect time to revisit your purpose. Rethink your mission statement. Redesign your products and your client profile. Ask questions like: Why do we exist? Who do we exist to serve? What other needs can we fulfill during this time?
Now is the time to reinvent your superpower.
The companies that will come out of this economy stronger than ever will likely be those who can utilize their own strengths to find a new market or niche.
After all, the best opportunities for growth during a recession will come from learning about consumers’ changing needs, then rapidly and efficiently developing new products or services, testing them, and rolling them out.
And what about finding new funding for your pivot?
I’ve received the most inquiries about this. So I asked Jason Calacanis — a technology entrepreneur, angel investor, and the host of the podcasts This Week in Startups and Angel — about fundraising support during the pandemic. He told me that because investors might have time on their hands right now, there is an opportunity to get to know them and make your pitch:
Your messaging should be crisp, short, and smart. Listen to their podcasts, watch their webinars, participate in video chats. Investors love numbers; talk with your numbers. It won’t be quick, and the bar will be higher — but right now, you have much less to lose. If you start to build relationships during this crisis, you might find it pays off in the long run.
Andrew Ackerman, Managing Director at Dreamit Ventures, forecasts that there will be less capital, but also less competition:
Venture capitals going into startups will be pickier. Some weaker startups won’t get investment. That is actually better for the companies that will get the investment since there is less competition.
Pivot if you want to be remembered.
I mentioned I’m a cautious optimist. Perhaps that is because I enjoy dealing with challenges. I take every challenging situation as a learning process and an experience lab. Just like building physical muscles, a crisis can make you stronger, and it can spark your creativity, too.
I was born and raised in a country that has gone through many economic crises. I believe that’s why the people of my home country have ultimately become resilient and creative, with a mindset of “everything can be figured out.” That might be the reason pivoting to survive is, to me, the clearest solution.
In unprecedented circumstances, there is no roadmap for success. Those who can forge their own paths will be the most resilient. I believe the leaders I spoke to would agree that the companies that will come out of this economy stronger than ever are the ones that will be able to pivot toward survival — and, ultimately, growth.
This article was originally posted on Forbes.
Arzu Tekir is a business strategist working with the leaders of the cities and organizations to create positive change. She helps entrepreneurs develop growth strategies and access funding. She founded Urbanite Venture, a growth consulting firm helping urbantech companies transform cities. She is the author of “Blockchain for Smart Cities, Simplified,” which examines the potential of blockchain to transform cities and redefine smart city applications. She has been featured by and her articles have appeared in various media outlets, including The Guardian, National Geographic Energy Challenge Blog, Jazeera Magazine, Bloomberg HT TV and NTV-MSNBC, Monocle, and Forbes. A sought-after speaker, she gives talks and moderates discussions on women entrepreneurship, urban innovations, and smart and sustainable cities. For more information, click here. Follow her on Twitter or LinkedIn.