Owing to lower productivity and increased financial volatility, most businesses have found it challenging to sustain their economic engines throughout the lockdown phase.
The effect on start-ups or small business ideas can be even harsher, given that they have limited cash funds and a narrower margin for handling unexpected slumps. This suspension’s ripple effect would have a significant impact on India ‘s economy as it impacts all industry sectors, resulting in low revenue generation due to a potential halt/slump in goods and service sales.
Strategies for the survival of business in lockdown
1. Tracking expenses against the revenue status
It is highly necessary for businesses to accurately assess their fixed and variable expenses and actual sales through this contagion. This assessment using golden rules of accounting will provide a clear picture of where a company is financially positioned and help entrepreneurs plan ahead in the current disconcerted marketplace. And after the pandemic risk disappears, all of these techniques will be applied.
2. Checking the feasibility of the business model
Considering that the environment shifts every week (and to make matters worse), it is essential to rethink the operating plan and reassess where the fintech companies in India are based on the sales and expense expectations. It is also a critical moment for monitoring existing revenue and cash flow indicators. Beware of what the runway is. Businesses must assess the impact on new sales, collections, credit cycles, and possible bad debts.
3. Plan policies for the next 3 months/9 months/18 months
It’s hard to predict how long this outbreak will last, so it’s essential to be prepared for all scenarios. If we consider it a 3-month problem, it can help an instant halt to variable expenditures such as hiring, marketing, travel, etc. However, if the crisis continues for nine months to a year, entrepreneurs will need to reconfigure their business strategy to reduce variable spending, renegotiate fixed expenditure (rent, wages, equipment lease payments, etc.) and focus only on the survival essential. Analyze how marketing expenses are to be reduced or raised. Severe revisions are necessary if the pandemic has an effect lasting 18 months or longer.
4. Be patient in securing investments
Any company needs money to run, and the problem that crosses any founder/entrepreneur’s mind during these tough times is where they get the funding from. Many funds have ample money to invest for years to come and do not shy away from that.
However, in the short term, we might be experiencing a fall in VC/HNI support. Investors may be more diligent, despite stringent verification protocols, which will take longer than average to make funding decisions.
This is the moment when it is all necessary to let it run smoothly in these tough times to realize the seriousness of the situation and make it beneficial for the company. Here are some suggestions for remaining linked and floating during the shutdown