During this time of fear and uncertainty, we are thinking about our entrepreneurs and partners and wanted to offer some tips and encouragement to help you navigate through these rough waters.
First of all, like most organizations responding to COVID-19, Innovate Mississippi has decided to limit employee travel and move all of our meetings to virtual (we use Zoom) video meetings. And, like most of you, we are closely watching the ongoing pandemic, the response and the fallout.
Several of our entrepreneurs had specific questions that we wanted to address about how COVID-19 will impact your startup company, such as:
- How will this affect my funding round currently underway or recently closed?
- How should I communicate with customers, investors, and employees?
- What should I be doing now to try to get ahead of this?
The situation is changing daily—and sometimes hour-by-hour—but we’ve found a couple of articles that we think could help local startups think through the challenges.
A few answers:
- Manage cash flow. Managing cash flow is always the mantra of any startup. But cash flow is particularly important during times of uncertainty. Look right now at what’s coming in and what’s going out. Consider renegotiating any vendor terms that might be flexible and look at ways to curtail costs, especially if your market is one that will feel pressure in a downturn.
- Over-communicate with your stakeholders. Every startup is different based on your market and runway, so besides managing cash flow, our main advice is to over-communicate to investors, employees, customers – really to anyone that you think might be concerned. Sure, it’s a little annoying to get emails from everyone you have ever been in contact with but it’s still better to over-communicate than to leave folks worried.
In today’s world, social distancing isn’t the same as not communicating, so use the tools available to keep in touch.
As for getting ahead of the curve, here’s some great advice from Sequoia Capital:
https://medium.com/sequoia-capital/coronavirus-the-black-swan-of-2020-7c72bdeb9753
Takeaways:
- Check your runway. If you assume that there will be pressure on your revenue or the economy as a whole faces a few quarters of challenges, how long can you last? Start planning.
- Look for opportunities. If you had to plan for a soft capital market and fewer investors taking risks, how would you approach the market and start generating additional revenue? What opportunities are there in this challenge?
- Move fast. In downturns, revenues generally drop faster than expenses. Look at how to cut now—including customer acquisition costs, headcount, overhead.
This article from the WSJ is also good, although it is behind a paywall:
https://www.wsj.com/articles/startups-race-to-shore-up-balance-sheets-as-panic-spreads-11584369722
As always, if you need anything, please let us know how Innovate Mississippi can help. Be safe.
