This article is part of a series on advice for engineering entrepreneurs.
THE INSTITUTE Wondering how your startup will survive the coronavirus crisis? Don’t panic. That’s the key advice from venture advisor IEEE Fellow Chenyang Xu.
“The coronavirus pandemic has changed the business landscape we are all familiar with, and it’s hard for anyone to accept the sudden, devastating changes,” he says. “Yet accepting the changes is the best step moving forward. The best action any startup founder can take is to not panic.”
Xu has advised hundreds of tech entrepreneurs and investors during the past two decades. He also has worked on the corporate side with global technology startups when he was general manager of the Siemens Technology-to-Business Center, in Berkeley, Calif. There, he led a team of venture directors who invested in and partnered with more than 50 promising technology startups.
Here are eight actions startups should take to weather the pandemic.
DO A REALITY CHECK
Redo your company’s strategy to face the current reality. Take a hard look at all the business assumptions you made about your customers, markets, product, revenue, and cost forecasts, Xu says. Most likely they’re no longer true. They might be invalid, changed for the worse, maybe for the better, or have remained the same.
Make a short-term strategic plan instead of a long-term one, he says. The plan doesn’t have to be perfect because you need to be able to survive right now.
“Just make a plan that adapts to the new reality, review it daily, and update it weekly. That’s really the key,” he says.
Next, he says, act on those new strategies decisively and immediately—whether that’s offering a new product or service, canceling a product line, or cutting costs.
“In this time of crisis, there’s nothing worse than being indecisive and taking no action,” Xu says. “Remember, the most important goal right now is to survive until the economy restarts or seize new opportunities to grow the company.”
LEND A HELPING HAND
Your customers are also struggling during this time so talk to them to better understand their challenges, Xu says. Try to go above and beyond by offering free products or services. If you can’t afford to do this, find other ways to lend them a helping hand.
“I think this is very important,” Xu says. “A difficult time like this is the best time to show one’s character and build long-lasting trust with customers. The more you can help your customers, the more you will also be able to weather the storm together.”
CARE FOR OTHERS
Be sure to take care of your employees and help the community.
“In this time of crisis, a lot of people around you have needs,” Xu says. “Protect your employees by lessening the risk of exposure to the virus. Give them a safe working environment. Also help out the community if you have the means and resources to do so. I know many startup founders who are doing just that.”
Communication is particularly difficult for founders of tech companies who often focus more on building their company. But good communication is essential. Employees, customers, investors, and purchasers are anxious and worried. Now is the time to keep them updated on where the company is going and or what the current situation is.
“Founders should communicate authentically and with compassion about the situation and the changes made to their business activities so they can win people’s hearts and their support,” Xu says. “Compassion is key because this is not just not about business, but rather a crisis that is having an emotional impact on everyone.”
USE YOUR TIME WISELY
You and your team may now have more time on your hands. Use it to plug the holes in your business or do all those important but not urgent projects you’ve been putting off because you were too busy. These could include conducting performance reviews of your employees; reviewing strategies, processes, and products; rewriting company policies; or streamlining procedures.
“When you return to business, you’ll be stronger and more able to weather the aftermath,” Xu says.
APPLY FOR FINANCING
Fundraising during this time will be harder than before the pandemic, so founders need to be aware of alternative funding streams. These could include government-funded programs aimed at helping small businesses and special low-interest or no-interest bank loans.
LOOK FOR NEW OPPORTUNITIES
While the pandemic might have shuttered your company’s traditional business, new opportunities could open up. But you need to know where to look for them. By keeping communication channels open with others, you might discover new lines of business that you can take on immediately to generate new revenue streams.
“Instead of thinking, ‘Oh no, all my opportunities have closed,’” Xu says. “Now is a really good time to look at new business opportunities.” Some IEEE members, for example, have shifted toward COVID-19 related projects.
No matter how severe and disruptive this crisis is, one thing is for sure, Xu says, the war on this pandemic will be won.
“Founders who navigate through this storm with bold, compassionate, and flexible leadership will not only survive, but also come out of this situation even stronger,” he says.
Kathy Pretz is editor in chief for The Institute, which covers all aspects of IEEE, its members, and the technology they're involved in. She has a bachelor's degree in applied communication from Rider University, in Lawrenceville, N.J., and holds a master's degree in corporate and public communication from Monmouth University, in West Long Branch, N.J.