However, it would be helpful to give your vendors, suppliers, landlords’ etc. It is understandable that it might be difficult to pay out vendors/suppliers during the lockdown. Maintaining healthy relationship with contracted parties Communicate with customers to understand their perception of the product/solution offered by you.Ģ. Customers can empathize with companies facing a crisis, as long as the communication is transparent. We are all in this together, so the ideal way is to stay transparent with your consumers about what your business is going through. Communicate transparently with your customers Here are a few tips to stay connected and afloat during the shutdown:ġ. This is the time when understanding the gravity of the situation and turning it favorable for the business is all that matters to let it sail smoothly in these difficult times.
#Why is rules of survival shutting down skin
Since, they are already invested and have their skin in the game they are more likely to help out during this time. In order to extend the runway, businesses can even approach existing investors for additional funding. But there is nothing to worry about because if we look at the previous economic downfalls, we can notice the market eventually bounce back after the end of an epidemic crisis. Investors will be more vigilant and may take longer than usual to make funding decisions after following stringent diligence procedures. However, we might witness a dip in VC/HNI funding in the short run. There are many funds who have enough capital to deploy for the coming years and they may not shy away from it. In that case, entrepreneurs and leaders will have to keep the communication transparent as much as possible with their investors and employees.Įvery business needs capital to run and the question that crosses the mind of every founder/entrepreneur in these difficult times is from where they will get the capital. They would require a revision of sales revenue goals and product timelines along with a new operating plan. Businesses will need to strategize, communicate, and act with compassion. Some serious reconsiderations would be required if the effect of the pandemic continues for 18 months or beyond. Analyze if you need to cut back or scale up on marketing costs. It may be a good idea to revisit sales strategy – selling online versus in-person. However, if the crisis continues for 9 months to a year, entrepreneurs will have to reconfigure their business strategy to reduce the variable expenses, renegotiate fixed expenses (rent, salaries, equipment lease payments, etc.), and focus only on the crucial essentials for survival. If we consider it as a 3-month problem, an instant halt on variable expenditures like hiring, marketing, travel, etc. Since, it is difficult to gauge how long this epidemic will last, it is important to be prepared for all scenarios. Plan policies for next 3 months/ 9 months/ 18 months.Businesses need to evaluate the impact on new sales, collections, credit cycles and potential bad debts. This is also a crucial time to track current financial metrics and cash flow. Checking the feasibility of the business modelĬonsidering the market is changing every week (and for the worse), it is imperative to reconsider the business model and reassess where your business stands as per your assumptions concerning the revenue and cost.This strategy can be implemented even when the pandemic effect settles. This assessment will give a clear picture of where a company stands financially and help the entrepreneurs in planning ahead in the current disconcerted market. Tracking expenses against the revenue statusĭuring this contagion, it is of utmost importance for businesses to conduct a proper assessment of their fixed and variable expenses as well as the actual revenues.So, during such testing times, startup entrepreneurs will have to adapt to a new set of rules and be mindful of the following aspects to alleviate risks and to survive the slowdown caused by the impact of COVID19. It is expected that India’s growth rate in FY20-21 will be down to 2% from a range of 4.7%-5.2% as was predicted earlier by the rating agency ICRA. The ripple effect of this shutdown will have a key impact on India’s economy, as all business sectors get affected resulting in low revenue generation due to an eventual halt/slump on the sale of products and/or services. Unfortunately, the impact on startups or small businesses can be way more brutal as they have scarcer cash reserves and a smaller margin for managing sudden slumps.
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