Startup Success during COVID-19 – How to Thrive, Not Just Survive
During COVID-19, the world of business has come to an abrupt halt – nearly every industry, sector, and business type (products and services) have been and will be impacted by the pandemic. If you are on the fence still wondering if now might be a good time to start your new business, I say, “Yes! Go for it!”
Here’s why startups thrive in times of uncertainty, recession and economic tribulation:
1. Expectations for “growth at all cost” go away:
It’s easy to focus on growth-at-all-cost when the markets are going up, venture capital is flowing like fine wine to any startup with a powerpoint presentation and a heartbeat, and company valuations are reaching epic, sky-high proportions.
During a situation like we have currently – the focus returns to building things people actually need, not what they “might” want. Profitability from day one becomes the new North Star.
This immediately re-calibrates an entrepreneur’s whiteboard to only focus on ideas that
A) solve pain now (not in the future)
and
B) can actually be profitable out of the gate
All of the other “nice to have” business ideas, models, platforms, apps and services don’t even get a chance of airtime because the entrepreneur throws away the rose-colored glasses and finally faces facts with market need – build stuff people want (now).
2. During boom times of economic growth, IPO wonderland, and Unicorn-frenzied valuations, engineering and technical talent are hard to come by. Not only are they in high demand, the engineers know it so they demand more. They get paid 2X-5X what they normally get in salary plus stock options, free meals at the office, healthcare, and other perks that 99% of startups that haven’t raised VC simply just can’t afford.
During down-markets, everything changes.
Two major things happen
a) Large companies shed excess technical talent and rely on the meat and potatoes that they need just to keep the ship moving forward to weather the storm
and
b) Engineers and technical talent fear getting fired so they start to look for side-hustle opportunities, extra income work, and plan for contingency outcomes – which plays perfectly into your new startup. Yeah, so you might not have a bunch of cash to match their salaries, but you can at least offer them a few thousand a month extra and let them work remotely which helps you build out your beta version and get to market while you help them weather their own recessionary storm.
3. Humanity opens up their hearts to new ideas during times of economic recession.
When things are rolling and the markets are hot, everyone is busy using the apps, product and services that they’ve become accustomed to using for years. They become apathetic to trying new things out, which makes it both significantly harder and more expensive to get your new product/service in front of those expensive, glazed over eyeballs.
Enter an economic down-turn, and you’ve got millions of people checking their phones, tablets and computers looking for products to save them money, services to ease their pain, and experiences that won’t break the bank but will provide exciting new times for a fraction of the traditional cost. Think fractional ownership, the access economy, on-demand work opportunities, turn-key delivery services, coupon and group-buying websites, and more.
4. It’s easy to raise capital for your startup when the market is hot. If you can raise money when times are bad, you’re one heck of a salesman (or woman) – hats off to you!
But my bigger point is, do you even need to raise money?
Can you build a Recession-proof startup that thrives when others are just trying to survive?
Bad times come and bad times go, the key is will your startup idea ride the wave when others choose not to?
I say F-it, go for your idea, build something people need now, focus on adding value, charge for it, and be comfortable with scarcity of the “traditional” entrepreneurial resources.
You’ll thank yourself for learning to be a scrappy survivor later when your business comes out on top! Everyone will wonder how you did it.
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