During the COVID-19 pandemic, companies are being force to adapt rapidly to stay in business. I … [+]
Women nearly always get paid less, even when they are the boss. That’s not actually a bad thing when you’re trying to make sure your startup or SMB survives a global pandemic like the corona virus. Even though women face a $189 Billion gender gap in funding, they still manage to create more resilient and more profitable businesses than some of their male founders. That strategic caution might be a source of enormous strength in the current crisis.
Originally, this story was going to be about equal pay for women founders. But as we head into what could be a third week of quarantine for many, the issue of pay is secondary to the survival of entire ventures. I asked six women founders for their advice on what they are doing to negotiate the survival of their business during COVID-19 crisis. Starting a business is risky in any economic climate, and start-ups and SMBs are the most vulnerable to failure during a recession.
Four themes from these experts jumped out:
- Conserve and lengthen your cash runway as much as possible
- Try to retain your team and prepare for recovery beyond the crisis
- Maintain extremely strategic spending choices
- Be of service to and invest in the communities you serve
Melanie Hopkins is founder of Finance Friend, a business management and financial consulting firm. She suggests three key focusing questions as founders consider their crisis and recovery plans. “Will your business be back in demand when the immediate crisis is over? How much do you absolutely need to get by? What will you track to ensure you get back what you are owed?” Hopkins suggests. She also specified the need to be transparent with your staff, and realistic about understanding timelines around lockdown orders. “Tell them as much as you can, as soon as you can,” she said.
Hopkins has slightly different advice for managing expectations with investors when it comes to volume of updates. “Keep them engaged, but don’t bombard them,” Hopkins advises. “Be honest with them about your cash runway, what you are hearing from customers, and what your plans are. If you need to do an emergency raise of funds, be clear about what the funds are needed for and how much time the funds will last,” Hopkins said. The key takeaway here is to be transparent and specific about timelines and use of the funding for all stakeholders and staff.
Forecasting revenue can be difficult in such an uncertain time, but attempting to do so is essential to planning. “Reforecast your 2020 revenue based on trends over the last 2 weeks to a month,” suggests Julie Sawaya and Ryan Woodbury, co-founders and CEOs of Needed, a nutrition community devoted to fertility and healthy pregnancies. Like many many small businesses, Sawaya and Woodbury are being clear-eyed about their budget constraints and anticipate very real disruption to near-term sales and marketing. “If you are a direct-to-consumer company and you’ve seen sales growth and favorable return on your ad spend, now may be the time to ramp up your investment in advertising, marketing, and inventory,” they suggest. “If, however, you’ve seen the opposite, don’t wait too long to pull back near-term investments in sales and marketing, inventory, and any other variable costs.”
Sawaya and Woodbury also chose to make sure Needed would place emphasis and budget dollars towards supporting their company’s ecosystem. Instead of buying advertising to build a near-term funnel, they are choosing to invest in the practitioners that are an important part of their community. Needed chose to support out-of-work wellness practitioners to delivering quality content for women who are overwhelmed with working from home during an emergency crisis while also supporting their families. Kirsten Karchmer, founder and CEO of Brazen, a community dedicated to alleviating menstrual pain, is following a similar path. “We are focused on finding ways to be useful for our community through educational and inspirational content, and doubling down on building partnerships. This allows us to continue to add value, gain exposure and grow while reducing ad spend costs,” Karchmer said. “We feel this is a huge opportunity to build trust with our community in a time when they need us to be leaders more than ever.”
Even when a company provides essential pandemic support services, strategic and difficult decisions have to be made. “The unknown will always be a constant factor for startups but add in a recession and a global pandemic, and you’re dealing with an entirely different beast,” said Iman Abuzeid M.D, co-founder and CEO of Incredible Health, a hiring platform that helps nurses and healthcare workers connect with hospitals. After determining what resources are available to support staff, she advises examining clients to assess which are unprofitable. “Depending on this analysis, you may need to consider asking for a price increase or terminate a client completely. This is not the time to subsidize clients,” Abuzeid said.
Taking stock of how to be flexible in what a business needs to spend is also an important part of survival. “We’ve been negotiating every fixed expense possible, putting off what’s not necessary or won’t be fruitful anyway in the next 6-8 weeks, and revising everything else,” said Allison Moss, co-founder and CEO of type:A, a sustainable deodorant company. “There has been so much support out there for small businesses! American Express is offering delayed payments. You have the ability to renegotiate contracts with your vendors or support providers. It’s time to think creatively about how you can structure things,” Moss said.
Relief programs dedicated to keeping SMBs afloat have also surfaced like Hello Alice’s new COVID-19 Business Center. Hello Alice is a free platform dedicated to women founders of SMBs, and their new business center provides timely and tactical advice for dozens of emergency scenarios like applying for government assistance, taking your company remote and mental health resources. It also allows owners to apply for $10,000 relief grants.
Beyond tactical moves, one piece of advice that I got that stuck with me was the emotional cost this pandemic is taking. While it can be easy to focus on running towards the fire of crisis, it’s important to remember that the COVID-19 crisis was unanticipated. “It is okay to grieve,” said Hopkins. “Two weeks ago, many businesses and founders were at the top of their game. This situation escalated so quickly and it was entirely out of your control.”