There’s no denying that the global COVID-19 pandemic has brought about a new recession. In these tough economic times where even the most well-established multinational corporations continue to be battered by turbulent financial waters, new businesses are more vulnerable than ever before. But while navigating the effects of the virus is by no means an easy task, it’s not impossible to do. With the proper preventative measures, you can position your startup in a place where it can ride out and survive the storm. With that said, here are a few tips to keep in mind.
Practice proven cost-cutting strategies
When the skies of the economy begin to darken, and startups start to see slips in revenue or funding begins to run dry, the first step is to start contemplating measures in cost-cutting. But what should an entrepreneur do about it? First, look for any unnecessary expenses like non-essential departments or underperforming projects. Additionally, in today’s era of working remotely, look into whether you need a physical space for your operations. If not, you may want to consider establishing a workforce that’s entirely remote or join coworking spaces — both of which are excellent ways to lower overhead costs.
Another strategy is to consider all options before making any financial commitments. For example, if you’re looking for office equipment like computers or need Really Useful storage boxes to organise paperwork and other items, it pays to put in some legwork on research and compare prices first.
Opt for freelancers
Filling vital vacancies while keeping costs low during tough times isn’t easy. However, you can achieve this by considering freelancers rather than employing permanent workers. Not only are they readily available across various industries, but they’re a lot less expensive than a full-time staff since you won’t have to cover any benefits. Outsourcing is also a growing trend and one that the pandemic will likely accelerate as more of the unemployed start taking in work for income. And if you’re working with limited financial resources, it’s something that’s worth considering.
Consider your funding options
For startups that are dependent on the infusion of venture capital (VC), the expanding recession is increasingly becoming a threat, with VCs setting to curb new deal activities. Therefore, it makes sense for startups to explore other alternatives to the traditional funding model of VC. One viable option is turning towards revenue-based financing, a proven model for startups at the growth stage. Under this option, a new business can raise the necessary capital from financiers who will claim percentages of the future revenue.
With trajectory-based financing, you’ll take the approach on another level with the capital firms making use of it for unsecured loans that are guided primarily by predictions of business trends of the future. But the most important part is that you’re wary of where the capital is coming from and that you take only what you need.
Surviving as a business owner in poor economic conditions isn’t easy. It’s even harder if you’re running a startup. But with these tips, you’ll give your enterprise a better shot at weathering the storm and enable your company to grow despite the challenges it faces.