We as a whole world are experiencing an inconvenient time on account of CoronaVirus. Since our country was under lockdown, the weight of recession has been more on the businessmen than the weight of the Pandemic, as it has bought more uncertainty for the unseen future.
Manas Vashistha, senior associate at Instarto, highlights various factors that have impacted entrepreneurship during COVID-19.
According to Dun and Bradstreet, the COVID pandemic has disrupted human lives and the global supply chain so severely that the bridges to recover the Indian economy, which was visible near the end of 2019 and early 2020, now have fallen down.
So read on to check the slip-ups, perceive the odds, and what actions can be taken to ensure that the business heads the right way.
5 steps for resource management
Manas has simple 5 pointers for portfolio companies to help them in managing their resources better during this pandemic:
- Cutting down marketing spends
- Cutting office expenditure (overheads), wherever possible
- Salary restructuring for at least next 6 months with some deferred pay-outs
- Renegotiation of contracts
- Putting expansion plans on hold or take it a bit slow
Start-ups should ensure its survival
Manas believes that a start-up’s response to the pandemic would depend on its scale of operations and its runway. The main aim for an early to growth-stage startup as of now should be to ensure its survival.
To ensure survival, start-ups will have to reduce their scale of operations and have to make sure that they have an ample runway ahead of them. The worst part about the pandemic is that you cannot really predict what’s going to happen. Even if the recession kicks in, the lockdown is going to be different from anything that anyone has seen before, and hence it will affect the responses to transactions by the customers once the lockdown gets lifted.
“I think it’s more than just surviving the lockdown. This pandemic has the potential to completely alter the society, hence a start-up should keep this in mind and try to envisage how the future is going to be and should make sure that it is aligned with that,” he says.
Nobody can plan for uncertainty like a pandemic
“An entrepreneur takes the risk and is rewarded handsomely if his risks work out well,” says Manas. “Nobody can plan for uncertainty like this; we humans are just not programmed to factor in viruses into our models in this age of the world,” he says.
Ambiguity in the current scenario is present for all entrepreneurs. It’s just that the effect of this concern is compounded for an entrepreneur because of the involvement of multiple stakeholders like employees, investors, etc. who are banking on him.
“We think the best way for an entrepreneur to manage the uncertainty is by sitting tight, keeping the morale high, and working on future strategies. He also needs to set the new culture and implement it right,” he says.
Time spent with family has helped to keep it all together
“We personally have never preferred working from home, so the whole work from home scenario does not come naturally for us. Though in the last few weeks of lockdown, the time I have spent with my family is wonderful and that has really helped me to keep it all together,” he says.
Manas lauds the Action COVID19 Team (ACT), a first-of-its-kind initiative by Top VCs and entrepreneurs with an INR 100 CR grant, which was launched to provide resources and guidance to start-up founders and employees.
“It is really the time at which the whole startup ecosystem not just in India but around the globe have come together to support each other to make sure that we get out of this debacle with a minimum casualty,” he says.
Opportunity for Investors
Recessions always come with exciting investment opportunities for investors who have the gut to take the risk. “dotcom bubble'' brought in its own success stories so did the subprime mortgage crisis. “I believe exciting opportunities are to come up in both public and private label investments. In private-label investments, valuations are going to go down a lot which can in turn result in some very exciting opportunities to generate good returns for investors,” he says.
(Edited By Rabia Mistry)