7 tips on managing a startup in a crisis

As the great bard Bob Dylan once sang, the times they are a-changin’, and fast. We’re less than a third of the way through 2020, but already plans are being scrapped and huge clouds of doubt have descended on economies around the world.

As we attempt to adjust to a very uncertain world, we thought it’d help to have a few handy hints on how to keep calm and carry on amid the turbulence. Two of Demium’s team members. And having both survived the 2008 financial crash, you can rest assured they know what they’re talking about.

How to manage a startup in a crisis:

1. Focus. Focus. Focus.
Really home in on one killer objective that’ll keep customers happy. So long as you focus on the one thing they’re willing to pay for, you should be fine. After all, a crisis weeds out the weak, so you have to be the best in your field.

2. Communicate with customers
Make them feel valued and strengthen the relationship by telling buyers how you’re handling any issues. It’s as simple as that. In times of struggle, you need to gain loyalty, which will only happen if you’ve built a level of trust.

3. Take care of those closest to you
You need your team just as much as they need you, so look after them. Fight to keep them aboard and make sure they know you’re fighting and how by communicating daily. Loyalty doesn’t stop with the customer.

4. Look to the future
Maintain a growth mindset and don’t stop progressing. Map out a plan to keep you driving forward no matter how many hits you have to take on the way — and there could be hundreds. Be prepared and take it one step at a time.

5. Dump anything unnecessary
Austerity sharpens the wits and encourages you to focus on the essentials. Get rid of everything and anything superfluous — be creative if you have to — and determine three priorities. Set KPIs and measure your progress as you go.

6. Optimise cash flow
Cash is king, so eliminate unnecessary expenses, make big reductions in the most efficient way possible and accelerate revenue. Remember, other companies will be doing the same, so speed is of the essence. Use your imagination!

7. Find a short-term fix
Look to local council: there may be initiatives in place to help startups in times of crisis. Of course it will depend on location, but these could include anything from tax deferment to salary refunds for reduced working hours to lenient loans.

Having built four companies over the last 12 years, Villacorta is no stranger to startup development. His most notable business was delivery company Food Messenger, which was acquired by Rocket Internet after just five years.

“When you feel surrounded by darkness, look for the light,” says Ouro. “Even when things feel hopeless, my advice is keep trying.” He had to do exactly that with HallStreet. “I spent the whole weekend thinking about closing,” he remembers, “But honestly I wanted to continue, because I believed so much in what we were doing.”

So Ouro reached out to his team. He explained the situation and his plan, after which some left, but enough stayed. They sold off all the laptops and phones they no longer needed to entrepreneurial friends, who all paid asking price — a kindness that he says he’ll never forget.

“When we really struggled one of our investors refused to even talk to us, let alone provide aid, but others were supportive and it really raised our spirits.” Ouro’s plan was “the progressive postponement of big problems”, which meant relaying to his suppliers that they would be paid every other month, instead of monthly, in order to give the company time to organise and close other financing rounds.

“With the money we made,” says Ouro, “plus a small amount that our angel investors left us and a loan guaranteed by the three co-founders, we made progress. We achieved milestones that gave us visibility, which in turn won us awards, brought recognition and contacts, and ultimately investment. Many people helped us and they will always be in my heart.”

In even the darkest hours, there will be a sliver of light, but it’s up to you to find it. Have faith in yourself and don’t give up — a crisis is only ever temporary and things will get better. And remember: times change, you simply have to roll with them.