Andrew Chung, founder of 1955 Capital, in his advice to startups, provides a perspective into different ways startups can adapt to the coronavirus pandemic. The investment firm held a virtual portfolio meeting with several company CEOs to discuss how businesses are dealing with the COVID-19 challenge. This health crisis has thrown many businesses into jeopardy, forcing them to change their approach to operations. For example, the reduction in travel due to lockdown restrictions means more employees have to work from home. As a result, startups may be facing an unprecedented moment to start and achieve revenue growth.
Importance of team morale in remote work environments
One of the essential ways to adapt during this period is to strengthen team dynamics and achieve a consensus. This management approach is more important than ever for adapting to post-COVID times. Teams need to stick together during the crisis and motivate employees to be productive. Some startups have remote workers whose morale and productivity will be improved by a team-oriented focus.
According to Chung in his advice to startups, building team morale is critical for remote employee productivity. This is made possible through constant communication and appreciation between a leader and their employees. Businesses should start thinking more about a team-oriented focus for success through this period.
CEOs should work with all members, allowing them to review their priorities individually. This can help mitigate any misunderstandings and frustrations that may arise when managing remote employees. Employees are more likely to be motivated when they feel valued and appreciated by their organization. This is why managers need to provide a healthy working environment that can improve team morale, thereby leading to higher productivity.
Adopt a global perspective
Startups should learn to develop a more global perspective and not be too U.S.-centric during this pandemic. There are more opportunities for startups that introduce radical innovations, which can be useful on a worldwide scale. With remote working and technology such as Zoom, businesses can transact with partners in different regions of the world. The global markets can be a source of revenue growth for startups, as well as an inspiration for determining how to keep their businesses alive.
According to 1955 Capital, startups can harness innovative distribution channels to grow their customer base and sustain their revenue stream. One way of adopting a global perspective is by understanding how customers are acting in other countries. Regions such as Asia already dealt with a similar health crisis during the SARS outbreak, and thus have prior experience on how to recover.
Governments in Asia are reopening their economies, which means you are more likely to get customers or partners from these areas. For example, Hong Kong has been returning to normal operations where businesses are opening with social distancing policies in place. U.S.-based startups can monitor how their business counterparts in Asia are doing during this pandemic.
Level the playing field
Andrew Chung also emphasizes leveling the playing field to deal with any limitations with on-site meetings. Since businesses are dealing with a new set of problems, they have to innovate their products, marketing, and distribution to get and retain customers. Leveling the playing field entails building trust with strategic partners and breaking geographical barriers. The limited face-to-face interactions due to social distancing and remote work require CEOs to become more involved in maintaining partners. The perception that investors have about a business and its ability to deliver will determine how well it performs during this period.
Businesses should also be looking for opportunities to align their interests with key stakeholders and other partners working from home. CEOs can easily make important decisions regarding global partners who they can work with sooner to remain open. There is a level playing field with the health crisis, which means startups can pursue investors from other parts of the world. Through Zoom, you can interact with investors from different regions, pitch your idea, and keep the business going.
Startups need to rethink their strategies for managing their operations during this time. Since these businesses are in danger of shutting down, CEOs need to form strategic partnerships to stay open. This can provide the needed space and funding to continue.
The runway is the amount of time that a business has until it goes out of business if the current income and expenses stay constant. It can be challenging to predict the time and duration of the runway during this economic breakdown. The number of people filing for unemployment has been on the rise after the lockdowns as businesses continue to feel the pandemic’s effects. As a result, it is difficult to predict runtime and how long it will take before things come back to normal.
Runaway planning entails meeting milestones and thinking creatively to increase value for the future. Some of the ways for startups to extend runway include reducing non-essential expenses and prioritizing spending on activities that create value. Startups can also extend the runway by changing the pitch of the spending ramp and reallocating fixed capital to monthly burn.
Most startups have never been in such a situation before and might struggle to survive while creating value. According to Chung, startups may need to revisit the terms of strategic collaboration because partners may be more open to compromise during these uncertain times. Some strategic partners might be willing to modify the scope of their projects to align with a business’ research and development spend.
Rethink approaches to fundraising
The current environment has seen severely restrained investor sentiment, due to the coronavirus pandemic. As a result, fundraising can be challenging for startups, especially those targeting investors with an extensive portfolio. This is because most investors prefer working with existing companies instead of startups due to the uncertainties of whether the business will thrive.
Startups will need to become more creative in getting funding for their businesses. CEOs have to think of new ways to convince investors to help fund their business amidst the health crisis. While many businesses may go into hibernation mode, startups need to raise funds that will sustain their operations. The coronavirus crisis presents a layer of uncertainty regarding how the market will come back. Only businesses with a better strategy for gaining new investors will survive.
During this period, investors may not be interested in startups, focusing instead on dealing with businesses they can trust. This can be difficult for firms without an established source of funding or a customer base. However, startups need to show investors introductions that are well vetted and qualified. The idea is to speak to as many investors as possible, pitching your idea and trying to win their trust for funding. You may find some people who are open to listening to your idea and leverage prior diligence.
During this global health crisis, businesses and especially startups need to adopt strategies that will better position them for the future. Startups play a vital role in the economy, but the coronavirus pandemic may reducing their ability to create and challenge their survival if they do not adapt to the new environment.
In recent months, there has been a drop in the number of active startups which has reduced employment opportunities. Business executives should be thinking about the best way to remain relevant and competitive in a post-COVID business world. Andrew Chung’s advice to startups is designed to help businesses survive the current crisis.