The COVID-19 (or coronavirus) pandemic has sent the global economy reeling. Here in Alaska, we have been operating under stay at home orders in an effort to slow the spread of the COVID-19 virus. Unfortunately, although seemingly beneficial based on statistics, these stay at home orders have forced most businesses to shut their doors temporarily. From big tourism to local shops, doors are closed to the public, money has stopped flowing.
Alaska Startups are no exception to these current circumstances.
There are indeed some sectors of the economy that remain mostly unaffected by COVID-19 business closures. These include shipping, logistics, education technology, and most consumer goods. Businesses that lie outside these narrow parameters should do what they can to prepare for the long-term economic impact COVID-19 is likely to leave in its wake.
Alaska businesses may face even more significant challenges than companies who were well established before COVID-19. Below we have shared a few of the most important steps startups should take to help maintain efficient operations during these extraordinary times.
1) Conserve Cash
This may seem obvious, but it should not go without being addressed. Cash is the hardest commodity for many businesses to get their hands on right now. For startups, especially, who may not have a significant cash cushion available to keep the lights on during long term business closures, cash should be preserved in the most prudent manner possible. While it is considered good practice for startups to have liquid cash equal to about nine months of operating expenses “just in case,” this is not always feasible, especially during the early months of business.
The focus should not just be on conserving cash but also looking at how money is being spent. Cut costs where possible. Consider customer acquisition costs, and putting any expansion plans on hold for the time being. At the same time, it is necessary to be sensitive to vendors and others who are part of your value chain and make any payments owed whenever necessary while avoiding spending that is not going to be beneficial immediately.
2) Prepare for Business in Alaska Post Covid-19
It is reasonable to believe that the first few months (or up to a year) following COVID-19 will be just as challenging, if not more, than what is occurring in the Alaska business sector right now. Once business resumes, things may still be slow, as opposed to how they used to be during the earliest months of the year. Buying power is not going to immediately recover as many people have been out of work and will not have the immediate financial means to begin spending immediately. Consequently, most discretionary spending will be put on the back burner. Businesses stopped very suddenly due to various lockdowns, but the rebound will not be nearly as quick and efficient. For B2B companies, prepare for a certain amount of outright business closure due to financial loss.
3) Focus on Productive Innovation
Innovation-driven businesses stand to come out of the COVID-19 financial crisis stronger and more well-positioned than some other businesses. This is even more likely to be the case for Alaska businesses that focus on digital trends. Due to COVID-19, the way consumers work, live, and consume has been forced to change, and it is likely some of those changes may never revert to their previous mode of operation. Therefore, businesses that evolve and innovate their products stand a better chance of leading and surviving post-pandemic.
Alaska startups should use this time to evolve their products and improve their overall customer experience. This is especially true for consumer product startups. It stands to reason that consumer products that fall under non-essential categories may see a lag in business recovery after the stay at home orders were released. It would be wise for startups in these categories to plan accordingly for the additional delay in business return.
4) Keep Your Employees and Customers Safe
One of the most important strategies for Alaska business owners during this time is to keep your stakeholders safe. It is the responsibility of Alaska startup management to do what is necessary to keep staff safe. First, comply with government regulations -even if it is not the most financially desirable or easy thing to do. Second, make sure your staff feels comfortable and clearly communicate that you are available to those who are in need.
If you are a startup that has remained open or has been deemed an essential business, not only must you keep your employees safe, but your customers as well. This can be a particularly challenging path to navigate. It is up to you as a business owner to determine how you can safely remain open, continue to remain financially viable but not open yourself, your staff, your business or your customers up to potential infection.
5) Remember That Hope Is Not A Secure Business Strategy
As a startup venture in Alaska during what is one of the worst financial crises since the Great Depression of 1929, businesses face challenges in opening and remaining open that are unlike any their predecessors have experienced. It is not enough to sit patiently and wait or hope things will quickly turn around so your business can return to its ordinary course of operations. Planning is essential to your survival. Work with co-founders and investors to create a real plan. Do not sugar coat the negative here-you need to look at the truths of what is to come economically over the next few months. It is essential to formulate a plan that will allow your business to survive the next year to year and a half .
COVID-19 has rapidly turned the market, and the majority of the investing world upside down in a very short time. Startup businesses have their own specific set of challenges as most have a finite amount of liquid capital. For Alaska companies, both large and small, finding, raising, or securing capital can and will be challenging for the foreseeable future. When businesses are temporarily closed, the ability to pad financial reserves while continuing to meet financial obligations becomes a significant challenge.
During challenging times such as these, it can be comforting to have an ally on your side when it comes to finding capital. The Venture North Group has extensive experience in both domestic and international arenas. We will use our broad-ranging expertise and extensive contacts to help identify the best funding sources for your business. There are many financing options out there for the startup businesses. Venture North Group works with Alaska startups to help you determine the most beneficial and effective funding source and strategies for you.