Ayushi Gudwani

The author is the Founder, FableStreet

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Learnings For Start-ups And Entrepreneurs From Pandemic

As start-ups and eventually as entrepreneurs, one needs to be resilient in these trying times.

The viral contagion has ravaged economies, people, and livelihoods. Globally, governments — rich and poor — are gasping for an effective coping strategy. We may have wanted India to remain immune to the coronavirus pandemic, but we have not been spared either. As countries grapple with this unprecedented situation, the start-up industry too, has taken a massive beating. Small businesses and entrepreneurs with limited capital have turned out to be a vulnerable group – their profitability and financial health have been directly affected by the pandemic and subsequent measures of nationwide lockdown. Never before have had businesses witnessed - zero revenues, high costs, disruption in supplies, employee safety concerns, and eventual risks of shutting down, within weeks.

Till last month, we had a long list of planned activities concentrated — on sales, consumer demand, product development, digital and expansion. Overnight, the onslaught of COVID-19 de-cluttered the vision and gave us a devastatingly focussed business perspective — one that is centred on survival.  

As start-ups and eventually as entrepreneurs, one needs to be resilient in these trying times. 

While there is no playbook a few personal learnings may help my fellow entrepreneurs:  

  • Be frugal - Firstly, focus on cash conservation and fundraising with a minimum of 1+ year of a runway is crucial. Unfortunately, COVID had to bring this to highlight, but risks of business closures have made us realize this.  

  • Business process re-engineering - Secondly, start-ups need to be prepared to pivot and change models overnight. They should be agile and open to newer ways of working. With the COVID-19 setback followed by the lockdown, business-building is going to make way for new business model evolutions. For instance, the FableStreet strategy has shifted from selling products to educating customers through content. The brand has now started manufacturing Sterilised Cotton Reusable Masks and repurposing its manufacturing units to support the pandemic.  

  • Unit economics - This entire situation and the future outlook of potential economic recession will bring the start-up industry back on the core fundamentals of running a business, such as ensuring that unit economics is right and profitability is important. Burn rate or trade-off between growth vs profitability story without clarity on unit economics and GMs won’t take off with investors anymore.  

  • Press the refresh button - Further, innovation in business models, not products, will be a differentiator going forward and determine the rate at which start-ups recover from this setback. For instance, retail and online industries have struggled and only those who are quick to change their sales approach and product innovation will survive with the new norms that have come in place. Once retail stores/malls open, social distancing will be a norm but how do brands ensure inducing trials and consumer comfort and safety? Is it possible to introduce 'By Appointment Only' methods or 100 per cent sanitization in apparel packaging post-trials, to avoid stores from being overcrowded? 

  • Stay in, stay relevant - Lastly, brand-building, backed by product, is key. Most brands will realize that brand-building at the inception of a start-up while focusing on growth will not work anymore. The lockdown timeframe is an ideal time to generate relatable content and offer relevant services to consumers, who are now online. They will eventually go back to brands they can trust and can relate to, which will also impact their purchasing behaviour.   

A majority of us are first-generation entrepreneurs still learning to scale, build teams and businesses, and fighting to survive daily. The struggles in the backdrop of COVID-19 are manifold - business survival, team safety and support, fundraising, and being answerable to investors. With muted revenue run rate the biggest challenge is inoculating teams from the vagaries of the market so they can do their jobs, continue building momentum against this market adversity and, ultimately, ensure company growth. In these distressing times, we must ensure support and give them a sense of security. This will help build confidence and will be reflective of their commitment to the company.  

Lastly, people who display the strength of character and solidarity will rise and benefit in the long term. 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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