Being in startup mode can be exciting and crippling at the same time! On one hand, you may feel a sense of triumph over the challenges thrown at you. On the other hand, the inability to manage crises effectively can make you wonder how you’ll keep your dream venture afloat.
Scaling a startup isn’t easy. Every entrepreneur aims at building a successful business; yet, the bitter fact is that startups often have to face hurdles that threaten their existence. The recent Global Startup Ecosystem Report reveals that only 1 in 12 are able to steer their venture towards success. So, a whopping majority of startups do not know what it takes to survive the odds of failing.
Crisis is inevitable!
Prevent a Small Business Crisis
What makes a startup stand out from the rest is how they prepare for them. In this post, we have enlisted effective strategies to protect your venture in a crisis.
1. Keep a Check on Your Financials
According to recent data shared by Fundera, a whopping 82 percent of startups fail due to cash flow problems. Owing to heavy investments in product development, R&D, online marketing, and other business operations, expenses tend to be higher than the revenue during the early stages of startup growth.
Here are a few tips to get hold of your startup financials.
Have a Strategic Financial Plan in Place
A strategic financial business plan enlists your sources of income, business expenses, and future investments and keeps a check on your cash reserves. This plan will help you outline a clear business goal, spend your money wisely, and cushion you against the economic crisis.
Ask for Upfront Payments
Working with clients without money exchanging hands can put a strain on your cash flow, proving to be a huge financial headache in the future. Make sure you include the payment terms in your project agreement, converting your cash flow crunch into a cash flow surplus.
It may be tough to convince certain clients to pay before rendering services. Try setting up a customer-friendly payment system in which they can pay you a certain percentage of the payout as and when a checkpoint is achieved.
Secure Your Funding
Prepare for tough economic crises by securing your lending options. Firstly, stay updated on the changes in lending procedures and check whether or not your industry is affected by a crisis. Talk to your bank about your options and the amount you can borrow.
Moreover, maintain a healthy credit score to improve your financial worthiness.
Cut Down Costs
Look for ways to minimize overhead costs. For instance, allowing your employees to work from home or a shared workspace can reduce costs while improving business productivity.
Similarly, hire freelancers through platforms such as Upwork or Fiverr to gain access to a wider talent pool while reducing the cost of hiring a full-time employee.
2. Play to Your Strengths
In a crisis, it’s best to stick to what you do best. This isn’t a good time for experimenting with new products or services. So, work on perfecting your existing skills and offer solutions that meet customer needs.
Customers are the lifeblood of any business. If they stay loyal to your business, anything’s possible! Top-notch customer relationships can help your business stay afloat, regardless of the circumstances.
A startup cannot afford to lose even a single customer. So, think of ways to add to customer delight. Deliver exceptional CX and add value beyond a purchase. This will encourage customers to be your loyal brand ambassadors.
Offering an after-sales incentive program or excellent after-sales service, for instance, can give your customers a reason to visit you again.
Stay Consistent on Your Brand Promise
As mentioned earlier, this isn’t the time to experiment. Stick with what you are known for. So, instead of looking for new markets, do what your brand promises while looking for innovative ways to manage customer issues and improve services.
Leverage the Power of Digital Marketing
Ensuring an up-to-date online presence is the sure-fire way to keep your venture afloat during tough times. Invest in digital marketing strategies and small business SEO to keep customers informed and engaged and boost your online reputation.
3. Know How to Tackle Security Concerns around IoT Devices
IoT has played a huge role in transforming startup owners’ visions into tangible business models and products. The internet of things forms the basis for various applications and helps startups deliver high-quality solutions, improve cost-effectiveness, optimize their operations, and improve customer service.
However, greater connectivity raises multiple security concerns as IoT devices are attractive attack vectors for cybercriminals. For instance, vulnerabilities in one device can make way for hackers and increase the number of possible points of attack.
Startups are the favorite targets for cybercriminals. A recent handbook titled ‘Cybersecurity for SMEs & Startups’ by CyberPeace Foundation (CPF) revealed that startups and SMEs are most vulnerable to such attacks. Further, home-based entrepreneurship, ongoing work-from-home policies, and increasing dependence on freelancers have exposed businesses to security risks like data breach and attacks on IoT devices.
All this makes it critical for businesses to plan and execute strategies to protect their network without breaking the bank. Here are a few security precautions to consider –
Map Your Attack Surfaces
Get an idea of all the IoT devices and services on the company network and work with your cybersecurity team to gauge the risks.
For instance, most company devices need not be accessible to the public. Make a list of such devices and put them behind a firewall. Similarly, gauge the need for continuing with outdated legacy systems that could be exploited by hackers. Also, have a robust system in place to update company software and apply security patches.
Improve Your Ability to Detect Unusual Activity
Equip your IoT security team to detect unusual activity on the company network, including traffic from any IoT devices installed. This will help you identify hackers infiltrating your system and eliminating threats if any.
Encourage Your Remote Team to Use Encrypted Messaging
Statistics shared by Flexjobs points out that remote working has increased by 44 percent over the past
5 years and more so since March 2020.
Though remote working is a great way to reduce overheads and mobilize your business plans, it’s important to be wary when exchanging sensitive data online. Use messaging apps and email service providers like Signal, Telegram Messenger, and Microsoft Outlook that have in-built encryption features, preventing any third-party from intercepting sensitive business information.
Further, remote employees often work from libraries, cafeterias, or other public places. This increases the security risks associated with connecting to public WiFi. Hence, it’s best to invest in a VPN service like Switcherry VPN to prevent hackers from intercepting data sent or received over public networks.
Encouraging your remote team to use Switcherry VPN, ExpressVPN or any of the other highly rated VPN platforms will mask their internet traffic. Thus, sensitive information will not be detected by hackers who are looking to exploit such vulnerabilities.
4. Have a Crisis Management Team in Place
Crises are often accompanied by controversies. The unexpected twists and turns, the rising anxiety, and the pressure to respond to the situation can trigger uncoordinated actions, leading to bad press and reputation damage.
Inaction is the worst response to any crisis. Plus, a disorganized response not just causes panic but also attracts reviews from a host of departments, including the legal, corporate affairs, and senior management.
Therefore, it’s wise to have a crisis management team of trusted and cognitively-diverse employees.
These employees should be experts at crafting a fitting communication and making rapid tactical decisions during this period. However, make sure you choose your spokesperson carefully. They should be fluent in the language and communication style necessary during the crisis.
Startups and small ventures are among the worst hit in a crisis, often forcing them to shut shop. But it doesn’t have to be that way!
The strategies shared above can help minimize the impact of these trying situations on your business. Use them to crisis-proof your venture and give it a fighting chance through these tough times.