Startups are like tightrope walkers. Product strategy, revenue, expenses, sales and marketing budgets – all elements must be precisely balanced at all times for the show to go on. This delicate balance is a part and parcel of startup financial life. With limited capital and often struggling revenues, looking and re-looking at this balance aka your financial projection aka your cashflow aka your use of funds is critical. Unexpected crises such as COVID-19 topple this balance in mere seconds. So, what can you do to ensure that you do not falter and fall off the rope? Here are a few simple steps.
Stop victim-blaming yourself
First, remind yourself that these are unprecedented and strange times. There are no examples to follow, at least not any that we are aware of. Blaming yourself for not being well prepared will be easy but try to desist. This crisis has overwhelmed the entire world. So, don’t be too harsh on yourself.
Be flexible, be nimble
There is no better time to come up with new products or strategies than during a crisis. Be flexible and be open to quick changes. At the same time, be careful not to create an impression that decisions are being taken without having given enough thought. This can be counterproductive. You do not want the team and the investors to perceive that decision making is taking place without thought and a strategy.
Keep your finances organised
If you have always been organised with your financial data, it makes it that much easier to analyse the current situation and figure out the next steps during a crisis.
A. There is no one right way to manage finances and make financial decisions.
B. Always apply your judgement aka don’t-blindly-follow-what-others-say-or-do.
With the footnotes out of the way, here are some tried-and-tested processes to stay organised with finances.
- Stay organized with your finances from get-go. Whether you use a simple Excel sheet, a Google spreadsheet or complex accounting software you should know how much you have, how much others owe you, what your burn rate is, how long the money will last, etc. If you don’t know this, stop reading, get that organised and continue reading. Yes, it is that important.
- Ask for help wherever possible. Asking for help is highly underrated and most often yields positive results. An example is asking your office space owner for a reduction in rent. If your request is not honoured, accept it with grace. If your request is honoured, accept it with grace.
- Follow up, follow up, follow up for unpaid dues. Religiously and at the right intervals of time. Give options such as paying in multiple shots. Try to make it easier for people to pay you, rather than not pay you at all. Know when to lose your temper, and when to control it when talking to those who owe you money. Both reactions may be necessary in different combinations at various times.
- Use available tools. Whether it be for reminders for payments or reminders for follow-ups (see above point), there are a gazillion great tools already available such as Google Calendar. Use these. Another little-known and highly-effective one is the “snooze” option in Gmail. Running a startup is extremely stressful. Save your energy and brain cycles for the more important stuff. Use tools for the rest.
- Know when to save and when to spend. Saving and spending are equally important. Just because the time isn’t great doesn’t mean its wise to save every rupee. Spending on the right thing is critical to growth. You may need to let people know that you have a solution that is great for the current time. You probably need to spend for this to happen. Again, there is no one right solution for everyone. See footnote A.
Be human, stay humane
Running a startup is stressful. Yes, I know I’m repeating myself but we can’t say that enough, can we? Mitigate some of the stress by meaningfully appraising your employees of the company’s financial situation. This will also help establish a sense of mutual trust. Here’s how.
- Explain the logic for decisions as much as meaningful and needed. Not all decisions need to be explained, though. Sometimes, just communicating the decision is enough.
- Be humane, but at the same time know that at times, the company comes first.
- Look to yourself to make decisions because you are best placed to do so.
- Ask, when meaningful, for different points of view. It always helps to see and analyze other ways of looking at things.
- Set an example yourself before asking the team to let go of anything.
Finally, you are what you think. Always stay and think positive. We will be out of this crisis soon.