Coronavirus outbreak is already having an increased impact on human lives and it’s starting to have an impact on the global economy too (Apple announcement on Coronovirus). With China playing a key role as a consumer market and also the major player in the global supply chain, large organizations, SMEs, as well as startups, have to be prepared for the worst.
As I write, the reports are getting worse and my thoughts and prayers go out to everyone who’s affected and their families and friends.
While we try and stay safe, follow good respiratory hygiene and hope for this outbreak to end, we still have to support China, support businesses, and run our own business. This post focuses on that.
The resilience that startups and entrepreneurs show to succeed against every odd will be tested now. And mainly because, there is no certain end timeline to work with. The challenges that this emergency presents is multifold and beyond anyone’s control like the ones below:
China is a leader in the global supply chain and almost all hardware startups and product startups have some kind of exposure here. Preparing your product teams, factoring in production delays and still managing their morale will be the key challenge.
A good way to mitigate these will be to work on hackathons, internal sprints and try and work on innovations. Invest this time to meet customers, finetune your product strategy and roadmap. Sharing your experts and your expertise with other startups in the ecosystem will be another way to make the most of the situation
Investments and fundraising:
Investors from Hong Kong, China, Singapore have played a key role in global funding and startups and we are already starting to see these meetings getting delayed.
In my discussions with VCs in Europe, and mainly in Finland – we see this delay to continue at least until August. And with the latest cases from Europe, this is already looking at high risk.
Growth phased startups should already revisit their growth plans, control their costs and delay big investment decisions. Needless to say, international expansion and opening new offices or markets at this point will be futile and also expensive.
Quite a few industries and startups are dependent on international tourists and China contributes significantly to the global tourism industry. This will be tested and the sales can go down quite fast (if not already).
Engage investors and keep them updated on your sales, and risk mitigation strategies. Ideate with the team to test alternate sales channels, different revenue models, and/or a different target audience.
Re-work on your marketing strategy and divert the investments to other channels.
Contingency plans, as part of business strategy:
It’s a tough investment decision for Small and Medium enterprises, but the stakes are higher and the frequency of epidemics and natural calamities is increasing. So, while we control and recover from this emergency, SMEs must invest in scenario planning and create a contingency plan for strategic, operational and financial risks.
Invest back in China and support your partners there:
China has played an important role in the last few decades for us to succeed. Quite a few businesses and leaders have taken a bet on their business with China playing a key role in that. And it is our time to give back! We must help the industry there to recover as soon as possible.
Give your partners cash advances, support with longer lead time, and send in a word of support where possible.
As entrepreneurs, leaders, and businesses, we always hope for the best while we fear the worst. Here are some of the things you can already do now and bounce back faster:
– Thank people around you and send in your support to partners worldwide
– Empathy, transparency, and communication. Your team’s morale will be tested because of supply challenges, consumer demand, and sales. As a leader, you should over-communicateAvoid all business travel for your organization – unless necessary, including domestic travel
– Ensure that the right leadership values are role modeled at all levels
– Treat this downtime as an opportunity and invest in internal hackathons, strategy sessions, personnel development, and innovation
– Control costs and revisit your growth plans. Push your international expansion plans to Q4 or early next year, where possible
– Proactively engage investors and keep them updated on your risk mitigation plans and the steps you are taking. This is a great opportunity to stand out from the rest
– Invest in a contingency plan as part of your business strategy and diversify the risks
– Support Chinese partners and industries with flexible terms