Startup Guide: The need for startups to reinvent themselves post-COVID

The year 2020 has been a turning point for most industries, enterprises, individuals and almost everyone across the globe due to the unknown, unprecedented, unexpected, and unplanned transposition caused by the COVID-19 pandemic. The world was forced to adapt to the ‘new normal’ and have been confronting a ceaseless saga that was perhaps not experienced by anyone at least three generations prior. Businesses and entrepreneurs globally have faced severe turmoil in their routine operations and have had to make acute decisions to get hold of the situation. We have seen extreme measures of survival and sustenance made not just by small, medium enterprises and startups, but also by big names globally.

As cash flows came to a standstill, debts increased, receivables were delayed, investments backfired, the entrepreneurs faced a do or die situation. Some sectors like hospitality and travel are still facing the aftermath of the pandemic and have not been able to combat the odds. Whereas some other sectors like the Pharmaceuticals and Medicines, FMCG, IT/ ITeS, Electronics, banking, etc, have been benefitted from the situation due to the shift in demands by the consumers.

The pandemic could have been even more devastating and would have adversely impacted mankind like the previous pandemics, had the technology, digitization, or automation, not played a pivotal role. Some entrepreneurs, Tech startups and investors found the pandemic as an opportunity and came out with out-of-the-box concepts and problem-solving innovations that helped see through the pandemic in a better way. In the Startup ecosystem of India, while many had to either shut down or face the crisis, but we could see many startups emerging in 2020 as well. As per a survey conducted by FICCI during mid-2020 with 250 startups and incubators considered, almost 70% of startups were adversely hit by the pandemic, approx. 12% had to shut down operations, and 68% had to cut down on their expenses. There were scenarios where investors had to hold investments that were signed pre-pandemic.

Given the roller coaster ride for startups and most businesses, the entrepreneurs need to approach the post-COVID times differently. The year 2020 has taught the business leaders what to sell and what not to, or more precisely re-invent their business strategies. Hence, entrepreneurs and business leaders need to filter out their products and services precisely focussed on the need of the consumers.

The Pandemic has taken a toll on the funding, investments, cash-flows, timelines, schedules and also untimely non-availability of raw materials, labour, logistics delays, the lower purchasing power of consumers, etc. Hence setting up revised realistic timelines will be of utmost priority. Also, there will be a more balanced check on cash flows. Startups may find fund-raising and investments a challenge at least for a couple of years. Hence as Mr Alex Lazarow rightly puts it in the Harvard Business Review article – “Startups, It’s Time to Think Like Camels — Not Unicorns”. The idea is that the Startups need to be like camels that can survive in the worst of conditions, for the next few years, then aiming to be ‘Unicorns’ – the term used for Startups worth more than $1 bn.

The usual strategy of Startups, which is to rapidly scale up by the means of fundraising and burning cash to capture the market could see a change in trends. The Startups might need to follow a more balanced and slower, steadier growth path. Hence, the perseverance and endurance of the concept and problem-solving ability of a startup would play an important role in retaining customers. Also, the startups need to stick to technology and revolutionary digitization. The pandemic has proven how technology is a boon as far as business continuity is concerned. Hence more and more SMEs and startups will be seen automating their routine business processes.

The larger enterprises will be seen upgrading to advanced technologies, voice-enabled services, touchless transactions, augmented reality, and so on. Moreover, there needs to be a thorough focus on virtual omnipresence and brand building using virtual means. The more constructive and cost-effective e-commerce solutions, digital marketing, web services will be resorted to extensively, rather than the traditional marketing drives. Another aspect of technology that would help avoid and control another such adverse scenario would be embracing Machine learning, data analytics, Artificial Intelligence-based processes to understand the significance of market, demand prediction and anticipation based on data analysis, and to cater to customers’ needs more precisely, thereby mitigating risks and avoiding wastage of resources.

As the pandemic has taught us to adjust and adapt, it has also brought about evolutions and new inventions that have emerged out of necessity more than anything else. The way forward for not just the startups but all enterprises would be to stick to sustenance and business continuity for at least a year to come. Nevertheless, technology and digitization are the need of the hour.

, Founder of Zipaworld and Group CEO, AAA 2 Innovate Private Ltd.>