The startup challenge: Tips to survive 2020 and thrive beyond

As we all adjust to the new norm, many businesses have been facing a new reality of slowing customer demand and supply-side disruption. For entrepreneurs and startups in the early to medium stages of their company’s lifecycle, these are challenging times indeed. Just as businesses were scaling up, growth has been suddenly curtailed by circumstances beyond control. With the impending recovery from COVID-19, there is a lot at stake for the startup sector and the economy at large. According to the International Monetary Fund, micro, small, and medium enterprises (MSMEs) account for 80 to 90% of all businesses in the MENA region, providing a much-needed source of job creation.

Here are 7 actions startups can take in order to get through 2020 successfully:

Address the dual challenge

Entrepreneurs and startups have been facing the dual challenge of staying afloat while ensuring they are in the best possible shape to compete as business restrictions are lifted. Although it is understandable that startups have been looking at ways to identify avoidable expenditures, cost-cutting must also be a question of balance. You could save money now, but would a dramatic cut in budgets undermine your ability to resume normal business and continue to deliver on your objectives? While headcount reductions and salary deductions have been inevitable over the past few months, the focus should be on ensuring the right skills remain in place, and maintaining motivation levels to achieve growth as we gradually return to a semblance of normality.

Accelerate digital transformation

While costs should be optimised across the board, we should remain focused on strengthening the digital aspects of business. Cementing a competitive edge with technological enhancements during critical times is essential, and can strengthen operations and product offerings, putting companies on a growth trajectory and preparing them for a post-crisis world. According to the World Economic Forum, automation, digital and artificial intelligence (AI) technologies are expected to account for 60% of potential productivity growth globally by 2030, creating a significant economic and social impact. Therefore, while preserving cash or extending cash runways is crucial, efforts should ultimately focus on emerging more resilient from the crisis, including investment in digital innovation.

Meet customer demand

When it comes to serving customers, there is a lot to consider. While a company optimises its costs, it must ensure its ability to continue fulfilling orders, sufficiently meeting demand, and maintaining service levels, especially when customers need it the most. In tandem, companies should broaden their supplier base while increasing local sourcing where possible.

Restrictions to move around physically, although eased, will still impact our ability to nurture customer relationships. Embracing digital transformation is not enough for the new reality. Reshaping the customer journey and the sales process may be necessary. The key to success is to determine the ideal redeployment of the sales force across channels in order to effectively meet customer demand. It is also crucial to retain a high level of visibility with customers and reinforce the perception that you are still strong in business, and continuing to meet their needs as expected.

Scrutinise sales and marketing

As venture capital becomes more strategic, investments in sales and marketing need to be carefully assessed. While enabling effective digital interactions with customers is paramount, startups should aim to extract the maximum value out of their investment in customer acquisition and revise how they measure ROI on business development expenditures, even on digital channels.

Manage employee productivity

Throughout 2020 and beyond, companies must go above and beyond to ensure employees feel safe, secure, and valued. Most companies will continue having work from home procedures in place even after easing restrictions. This represents an opportunity to review existing policies to ensure employees remain productive, and corporate cybersecurity is not compromised.

Promote resourcefulness

As start-ups navigate ways to reduce costs, they should bear in mind that a more minimalist approach to operations may become the new normal. In the wake of past economic slowdowns, notably in 2001 and 2009, we saw a decline in companies’ ability to raise money from investors. In this context, funding rounds in the next 6-12 months may not go exactly as planned.

While liquidity in the ecosystem is plentiful and traditional investors are also moving to invest more in digital, investors will re-channel venture capital prioritising sustainable, resilient businesses with a clear path to profitability. Growth in the future may have to be achieved without the fuel of abundant capital, and success will be determined by the level of resourcefulness seen in a startup as an entity and among its employees. 

Emerge stronger

The SARS outbreak of 2002-2004 gave rise to once small e-commerce company Alibaba Group, leading it to the forefront of retail. Similarly, the 2008 economic downturn heralded giants such as Uber and Airbnb. Presently and despite lower valuations, COVID-19 is an opportune time for B2B technology startups in the MENA region to thrive. As businesses accelerate their digital transformation, B2B startups offering digital solutions to catalyse digitisation represent the very engine for transformation. Startups in sectors such as FinTech, HealthTech, and EdTech are poised to achieve rapid growth due to their role in enabling the digital transformation of their respective sectors.

While some startups may find it difficult to weather the impact of the current slowdown, a measured approach that balances current and future needs, coupled with the right digital mix that empowers the customer experience, will steer startups to safety and propel them to a brighter future.

Connect with Tushar Singhvi on his MAGNiTT profile.


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The Food & Beverage industry saw increased investment activity over the last 5 years, jumping from just 10 deals in 2015 to 54 in 2019. Discover more trends and insights in our 2019 F&B MENA Venture Investment Report.