Coronavirus: Reinvent your startup to survive—and thrive

Image: Shutterstock

As the coronavirus storm will be followed by a serious economic downturn, startups have a difficult challenge ahead. Founders should reinvent their businesses not only to survive, but also to thrive and rediscover growth in the near future.

Firstly, startups need to extend their runway by cutting every possible cost. Founders should evaluate even their fixed costs and re-negotiate every single contract. They need to put in place lifeboat plans for one and two year downturns.

In this challenging time, founders need to start fresh. Whether they have been CEOs of their startups for two or five years doesn’t matter anymore. Whatever was done in the pre-coronavirus era doesn’t hold much ground. They need to imagine that they’ve just stepped into the CEO role, which means that they should take a fresh look at the business and its finance, sales, marketing, product road map, teams, etc. They need to come up with a new business plan and strategy and also re-commit emotionally to this new plan.

Furthermore, founders should re-evaluate and analyse the value proposition of their products. A new business plan and strategy may need a new product roadmap. When necessities have overtaken wants and luxuries, is the product still relevant? The market and consumers are no longer enticed by wishful products because there is no money to buy those. A need-based product that is cost effective is what the market will likely buy.

Next, the sales focus in the short term should be skewed towards growing industries like healthcare, financial services, education, online retail, collaboration tools, online gaming and entertainment. These are the segments that are doing well and have the wherewithal to buy. The marketing pitch and go-to-market should be charted keeping these industries in mind.

Also, one may have to look at the geography of focus for sales in the short term. Founders should focus on geographies that need fewer resources and give quicker revenues. The US and Europe are reeling under serious coronavirus impact and economic downturn looms large there. International travel may take a while to come back. It’s therefore time to focus on India, which will open up faster. One of our portfolio companies had a 100 percent focus on the US market, but now they have turned it around to have a 100 percent India focus for the next few months.

It’s crucial to remember that although funding has thinned down, it hasn’t dried up completely. VCs are cautious and eye only those startups that are exceptional. So how, then, can you turnaround your startup into an exceptional venture with the limited runway that you have?

All in all, founders should not wait and watch, but act. They need to be creative, decisive, lead from the front and inspire their teams in this difficult phase. No winter lasts forever. Tough times also provide an opportunity. Companies such as Airbnb, Square and Stripe all were launched during the global financial crisis.

The writer is General Partner, YourNest Venture Capital

Click here to see Forbes India's comprehensive coverage on the Covid-19 situation and its impact on life, business and the economy

The thoughts and opinions shared here are of the author.