With the COVID-19 situation going on globally, the whole world has somewhat come to a standstill in terms of human movement, economic slowdown and this has affected the start-ups, SMEs, entrepreneurs, and their teams in terms of salaries and work efficiency.
Our Prime Minister Narendra Modi had ordered lockdown from March 25th to prevent the further spread of the Coronavirus, though many restrictions were eased for transport, manufacturing & other services from May 18th. Further on, the actual impact will become more apparent in the June quarter & will depend on the severity of the virus spread, the duration of the Coronavirus outbreak & the lockdown.
Sreejit Nair is the Vice President at Practus Advisors & MyCFO, who assists companies to solve business problems. He has over ten years of experience in Marketing & Branding, International trade & Investment, Project Execution, and Business Development.
The organization today is disrupting the ‘consulting’ space by committing tangible outcomes (using a proprietary ROI framework) to clients. Some of the Performance Improvement Solutions within the healthcare segment where MyCFO has delivered significant ROI to CEOs'/CFOs of mid to large corporations are-
- Revenue Optimisation
- Cost Optimisation
- Working Capital
- Data Analytics and Robotic Process
- Post-Merger Integration
With more than (200+ full-time and 1,200+ associates) expert professionals and having integrated proprietary processes with technology to solve client problems, MyCFO focuses on hands-on implementation as compared to being advisors in nature.
Time to make difficult decisions.
All Businesses have been badly hit due to COVID19 and strategic priorities have undergone a complete change.
“We feel this is the time to respond intelligently by re-prioritizing what is most important for the business to survive and continue. It's time to make difficult decisions and it's more important to decide on what not to do rather than plan strategies for market penetration,” he says.
MyCFO team is working on overdrive trying to leverage their experience of having managed multiple situations and companies in varied industries and stitch together best practices from better-managed companies. The client organizations are using their network of professionals (Not just MyCFO but others as well) across industries to facilitate interactions with client management teams, discuss challenges and the potential steps to overcome them, access financial forecasts in the light of the current economic conditions as well as in this period of uncertainty and accordingly prepare a detailed plan for execution covering mitigation ideas for varied scenarios. “We are also reviewing the government declared packages and moratoriums and how these would impact the companies to sail through this period,” he says.
To-do list for startups to cope with the economic slowdown
The Pandemic and lock-down across India and other countries have significantly curtailed businesses and the startups are experiencing major impacts no matter how established and fast-growing they were. “They are all re-looking on how to manage and operate their business including re-calibrating their growth and strategic plans. The uncertainty in the business environment has made each company dip into their cash reserves to manage sudden slump but largely startups which always had scarce resources/cash reserves are on the verge of wipeout and have no other options than to hibernate or look at cutting parts of their service/product lines to make the organization lean,” he says.
He has shared to-do list for start-ups to help them cope with the economic slowdown due to lockdown:
- Track every rupee being spent - 'Cash is King'
- Communicate transparently - External & Internal
- Re-Calibrate the business model - Survive to Scale-up
- Discuss with peers/experts - Lead from the front
- Agility and Flexibility - Startups should have this
- Look to adopt technology/automation - the new normal is here to stay
- Plan policies for the next 3 months/ 9 months/ 24 months
- and think of adapting your solutions to markets that are less hard-hit.
Leaders need to rise up now.
Nair says, “Crisis is when difficult or important decisions need to be made, and leaders need to rise up to this situation. It also sets up the stage to be resilient and look for opportunities to make something good when it seems impossible.”
- Few things that Entrepreneurs should focus on during this crisis scenario are:
- Reduce everything that isn’t critical
- Align expectations be it with internal team members or with external clients/vendors
- Stay Positive or remain optimistic but 'adjust sails'
- Communicate honestly Demonstrate empathy and compassion
- Visualize the potential impact and prepare plans to navigate the crisis " you are the captain and you need to take charge"
- Involve team to execute the plan
Following a healthy lifestyle.
Srijit always wanted to follow a healthy lifestyle but to be true – he never could follow one, nevertheless, the pandemic has somewhat subconsciously pushed him to take a positive step towards good and healthy food habits. “Undoubtedly, the lockdown and work from home have provided each one of us the option to be with our immediate family for long hours but it has also impacted the social lives and brought in stretched working hours to sustain business commitments. Hence it is very important to use this period for reinforcing family ties as we stay home but equally important to maintain a healthy mental and physical state,” he says.
He is positive about the Action COVID19 Team (ACT) movement, which is a first-of-its-kind initiative by Top VCs and entrepreneurs with an INR 100 CR grant, which is launched to provide resources and guidance to startup founders and employees. “Certainly a good initiative which plans to back capital-efficient and scalable solution ventures which are solving challenges like shortage of medical equipment, helping in monitoring the situation, providing mass and affordable testing solutions, and more,” he says.
Business activity recovery is expected to take time
Sreejit believes that the market which was taken down by the financial tsunami of ‘COVID19 would be getting some respite with the recent announcements of economic booster package/ liquidity injection into the economy. “However based on history, markets/investors dislike uncertainty and till some more clarity comes on some of the schemes that have been announced and the government sheds some more light, things look risky to invest without doing very thorough research about the company's performance over the next 12 months,” he says. Looking back at history on market corrections in India, most of them were driven by financial market excesses or economic disruptions of some sort, with a prolonged impact on the market sentiment. “However, I believe over the mid-term Indian markets should respond favorably once the dust settles, the fear and the panic subsides and economic activities restart,” he says. The PE/VC investment activity across all deal types is expected to remain subdued over the next few months due to the dwindling economic condition owing to the lockdown and COVID-19. “Moreover The economic pain of the pandemic will be felt far and business activity recovery is expected to take time in the uncertainties of The New Normal," he says.
(Edited By Rabia Mistry)