Coronavirus changes everything: Five strategies to help your startup find its 'new normal'
Startup life is always frenzied, but over the last few days the frenzy has escalated to epic proportions. Not since the horrific events of 9/11 have I seen social and professional conversations so universally and completely monopolized by a single topic. Coronavirus is an economic and social sledgehammer that has descended upon all of us. I’ve spent the last few days on countless calls with portfolio and non-portfolio CEOs offering whatever help I can as they navigate what my peers at Sequoia termed a “black swan” event. Here are five strategies I’ve been suggesting to CEOs.
Accept the problem. There’s no time for denial.
When a disaster takes place, there’s always some percentage of the population reticent to accept it. In the last 72 hours the founders I’ve spoken with have varied greatly in their level of acceptance. Some initially felt confident that their businesses would be insulated or might even see an uptick. Others started seeing negative ramifications to their businesses right away and have been adjusting appropriately. Over the span of a couple of days, they’ve all come to recognize coronavirus for what it is: an unexpected seismic force that will upend every element of society. While it’s true that some businesses will suffer more direct, severe and immediate impacts than others, none of us will emerge from this pandemic unscathed. The sooner startup leaders move past denial and start mitigating the scope of the impact, the better off they and their many stakeholders will be.
Reassess business as unusual.
I serve on 10 company boards. Each one had its 2020 operating plan approved in January or February. Today each of those plans must be re-evaluated.
By nature, most startups (like humans) have a tendency to overestimate what they can accomplish in a year and underestimate how much they will accomplish in five. Right now, many startup operating plans overestimate top line growth while underestimating the pandemic’s impact. This double whammy must get baked into revised operating plans for 2020 and beyond. Remember that the risks of being underprepared far outweigh any downsides of overpreparation.
Make your revised operating plans more conservative than you think is necessary. In other words, plan for the worst and hope for the best. Sales cycles will lengthen, and average deal sizes will shrink as both consumers and businesses become more reticent to spend. If you sell to SMBs you will be forced to offer more lenient terms or risk losing them as customers altogether as they struggle to retain solvency. Companies selling physical products will see their supply chains disrupted, resumed and disrupted again as new outbreaks emerge. Startups relying heavily on in-person sales efforts will also take a hit, given travel restrictions and the likely adoption of remote work among their customers. These companies must master the art of digital selling. Calls and video conferences are imperfect replacements, so entirely new sales processes must be established. Even software companies that sell bottoms-up through user-driven adoption will be impacted. We all will be. Plan accordingly. Spend as much time discussing the tactics of tomorrow and next week with your team and boards as you did discussing your strategy and plans for next quarter and year.
Be the leader your team is craving right now.
Winston Churchill said, “Things are not always right because they are hard, but if they are right one must not mind if they are also hard.” It’s in moments of crisis that leaders reveal their true mettle. Nothing matters more than people. Show it. Start by mandating telecommuting.
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