The world is within the midst of a crisis, and it's obviously difficult to understand a way to act then. However, it's not the primary crisis the planet has been in, and there are important lessons to be learned from history.
Only within the last 20 years was a true crisis in 2001, and one in 2008. Our concern for the important entrepreneurial ecosystem is that a lot of today's start-up employees and leaders weren't even in working life in 2008. they need thus only experienced a boom.
We have previously spoken highly about the extravagances we've seen during this boom. Many of those risk capitalists could have prevented, but as long as everything goes up everyone seems to be on the train. Now there's the danger of investors jumping off the train and alone within the locomotive then stands the contractor.
On stage and in interviews, we've railed that companies without revenue don't seem to be companies - but hobbies. we've said that the more ping pong tables you've got, the more serious profitability you'll get. we've done this because we've seen the startup shark before and been afraid that we'll all over again neglect the important new companies that startups are often.
We now hear about entrepreneurs without a well-functioning business model who thinks that the state, banks or venture capitalists should rescue them. Here's the watch for you:
IT WILL NOT HAPPEN!
Unfortunately, even those with a working business model cannot feel safe during a crisis, because within the end the customer decides. And at once the customer decides that he doesn't want to erode a restaurant, shop in an exceedingly store or travel. An unqualified guess is that it spreads far beyond these industries, similar to in previous crises. This results in the recession, reduced demand and every one the sadness that comes from it.
So secure your business as far as it can go.
However, the crisis implies that some things will change fundamentally, and a few corporate valuations will never come. we will take Cisco as an example. Cisco, in 2000, was the world's most valued company, as it built vital parts of the net. Solid business concept and to mention the smallest amount in time, then as now. However, the share has never cost the maximum amount because it did during the dot-com years *.
OK, so what's our advice to the important entrepreneurs who build a new company?
- Cut the prices. It should be wiped out March, but if not, have intercourse now! Cut them lots. Unfortunately, it's sad and it hurts, and also the fact is that it'd not even help. Take it seriously - and you give your company an opportunity.
- Don't count your budget on historical revenue, it's probably partially or completely gone.
- Don't expect your bank, or your venture capitalists, to set up. They, like everyone else, are the closest to their own wallet.
- Start planning for post-COVID, confirm customers remember you when it turns around.
- Last but not least, remember that crises have happened before, ride this out now, and you have got guessed 10 years of boom previous you.