We face a unique situation. Of course, humankind has seen pandemics throughout history, but none of them have had such damaging effects on the entire world. The World Economic Forum reports that “coronavirus shock is severe even compared to the Great Financial Crisis in 2007–08,” because it simultaneously hit households, businesses and financial institutions throughout the world. It is not surprising that so many entrepreneurs don’t know how to react.
Economic recession is something that none of us can control but we all have to deal with. Tech entrepreneurs who want to overcome the crisis as fast as possible should look forward and focus on the new prospects.
The Stay-At-Home Emergency Has Changed Businesses
Every company’s management has two choices: Cut budgets, and fire people, or discover new opportunities, and change. I think the last would benefit more.
You have probably heard the stories about businesses that have managed to adjust to the emergency. Alcohol factories have started producing antiseptics. Clothing brands have started making face masks and medical uniforms. Restaurants have started offering delivery and takeout. Some owners of local businesses have even decided to cooperate with former rivals to survive. Not to mention the rise of e-commerce and logistics.
The world we knew only a couple of months ago is already history. The leaders of tech companies have to understand and accept this fact. It is important to think about the future instead of rehabilitating usual business models and processes at any cost.
Analysis Instead Of Panic
Business is about people, so a crisis is the time to save and invest in human resources. In previous recessions, the companies that cut costs fastest and deepest had the lowest probability of outperforming competitors after the economy recovered — only 21%.
To go back to normal, you will need a team that helps your company recover by doing their jobs well. Of course, there are businesses that truly cannot afford to retain employees. If that’s not your case, do your best to avoid firing team members or cutting salaries. It is not wasting money. On the contrary, this strategy helps to prepare for the deferred demand.
Here is a simple example. We all need regular haircuts. When beauty salons and barbershops open, customers will rush to take care of their appearance. The same will happen with cinemas, restaurants, gyms and everything we lack at the moment. It will eventually happen with your business services, and the lack of specialists will become urgent. This situation reminds me of a slingshot – on hold, but ready to shoot any moment. We don’t know when it will happen, but we can prepare.
Facing The Consequences Of Lockdown
COVID-19 may cost the global economy $1 trillion this year alone. Yet, an economic crisis is not new. Unlike the global pandemic, it has happened before, and not so long ago. Some of you still remember 2008, don’t you? The key methods of fighting the crisis haven’t changed much since then.
An economic crisis is the lack of an opportunity to develop. Businesses have to focus on surviving instead, and this situation encourages the search for extraordinary solutions more than ever. Deloitte states that market shapers will emerge stronger than before. It means that identifying new opportunities is more effective than focusing on the crisis itself. That’s what company leaders need to do: figure out how to play by the new rules.
Checklist List For Tech Entrepreneurs
There is no universal and 100% effective solution that will help to lead your business out of the crisis. We only get a complete picture in retrospect and currently have to learn from the twists and turns that happen in between. Still, some things will ease the struggle.
- Prepare for the new realities. The world has changed. Adjust your business ecosystem to the current demands of the market.
- Estimate the effect of the quarantine and the developing crisis on your business. Be fair to yourself and your team.
- Communicate with the team. A lack of information leads to hypotheses. Hypotheses lead to rumors, and you risk facing another crisis — an in-house one.
- Know your client. Learn how your partners have changed throughout the crisis. What do they need now? What approach is the most effective? How has it all affected the service delivery process? Do some research.
- Always apply critical thinking. Use the forecasts and experts carefully. Remember to check the facts.
- Be ready for the changes inside the company. Maybe some of your team members have realized that they like working from home. What if 15% to 20% would like to keep working remotely?
- Be reasonable. Restoring the former processes at any cost may not be effective. If you have managed to transfer an entire company to remote work in a day or two, you will be able to work with a team that already knows how to communicate and collaborate using virtual platforms.
Acceptance, analysis and adjustability are three key principles that will help tech businesses thrive. Keep a cool head. Stay positive. Reflect on what you have learned. Use this experience to prepare for the next crisis, just in case. Analyze the situation. There is something you can offer this newly changed world — that’s for sure. Now, it is time to decide what exactly you will offer and start exploring new opportunities.