You’re reading this article because you probably googled “how to survive a business crisis.” The COVID-19 pandemic has spared nobody. Small businesses have been hit the hardest and many are simply shutting down. So what do you do when nothing works, the business fails to generate revenue, you have mouths to feed, and bills to pay?
You keep calm and read this post.
How to survive a crisis?
According to a CRISIL report, MSMEs and small businesses will lose about a fifth of their margins due to the coronavirus. What’s more, a recent survey of 8400 businesses by LocalCircles showed that only 16% of the businesses had cash left for the next 3-6 months.
This is bad news. But as they say – before things can get better, they often get worse. So how can you prepare for the worst? At Instamojo, we have faced crises long before the coronavirus hit us. In early 2017, the company was on the verge of shutting down.
“We were dead broke and we had to call Kalaari (Capital) to bail us out with another $250,000 (Rs. 1.6 crore), which saw us through the next six-to-eight months,” – CEO Sampad Swain told OfficeChai in an interview.
Gathering from our experience, we have put together 5 strategic steps you can take to bet the crises because no matter what – you can win this battle.
5 ways small businesses can survive the crisis caused by COVID-19 pandemic
1. Accept you’re in trouble
Only when you realise the magnitude of the crises and the fact that your business is not going as planned is when you can start taking preventive measures to stop it from spiralling. Take a day or two, or a whole week to just let the fact that business is not okay, seep into you.
Once you let it sink in, you’ll be at your calmest.
2. Assess your runway
So how much trouble are you in? How much cash do you have left in the bank? How many months can you pay salaries, rents, etc? Do the math. Figure out how far you are going to get with the current financial state and work backwards.
3. Cut your expenses
Just do away with non-essential spending. At Instamojo we took pay cuts, cut down on office space, and brought down our acquisition costs to zero when times got tough.
“We have always been a lean company, but we had to tighten our belts even more. We cut costs, the founders gave up their salaries. If we didn’t turn a profit, we would wind up.” – Sampad added in the OfficeChai interview.
4. Optimise your spending
Businesses that have it hard at this point can’t just stop spending. Therefore, you’ve got to figure out what’s most important for the business and cut deals with vendors, suppliers, freelancers etc. Recycle money, encourage customers to buy redeemable coupons, optimise working capital as much as you can.
5. Prioritise revenue-generating projects
Do what you’re best at and keep investing time and money into projects that will generate money for you. If your core business has taken the hit, consider pivoting. Pivoting can be a saving strategy if done right. It requires research, planning and precise execution. Some low-risk pivots are worth experiment with.
For example, when Temple Adventures – a scuba-diving instructing school, got hit by the lockdown, they just moved their coaching online! They started doing Instagram LIVE sessions and offering theoretical courses on diving and its benefits and much more.
Similarly, Ketki Barfiwala, founder of baking studio Caramella, started offering online baking courses to keep business on track even when the lockdown caused her to shut down the studio temporarily.
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Hi to everyone who’s new on my page 🌸 I’m ketki ☺️ My love for dessert and baking got me to start Caramella in 2015. I have a studio in Santacruz, Mumbai from where I take on orders & do workshops 🌸 Owing to the current scenario, I am doing a lot of workshops online (link in bio) and also sharing a lot of recipes on my page 🌸 I love food styling and photography. It gives me a sense of satisfaction and I find it fun! 🌸I’m always looking and wanting to improve my photography skills 🌸 Hope to see you around! The recipe of these vegetarian baos with mushroom filling will be up today evening! So put in your reminders 😍🌸
BONUS: 3 Tips to help you make it through this
- Quit hyper focusing. Focusing is good but overt focusing can cause you to miss out on perspective and lose opportunities that are right in front of you.
- Adopt a routine. Our bodies are tuned to go into fight-or-flight mode during a crisis and we abandon all routine trying to fix the one thing that’s wrong. That makes it worse. Do not ignore personal relationships and health.
- Get ready to share and learn from experiences. This is a great time to talk to people having similar or different issues. People with similar problems can help you find solutions and those with different ones can grant you perspective.
Get in touch with us if you need to talk to an expert about business challenges. We can also help you promote your business and bring your story to our 1 million+ users. Just write to firstname.lastname@example.org if you want to be featured.
Have faith. Stay home, stay safe.