It was my privilege yesterday to be invited to spoke in a panel organised by the Dr APJ Abdul Kalam International Foundation run by House of Kalam, Rameswaram. Inspired by Dr Kalam’s Vision 2020, the half-a-day webinar titled “India Beyond 2020” covered topics on Health Care, Education, Industry & Rural development. The webinar was inaugurated by Padma Shri awardee Sri Y.S.Rajan (Honorary Distinguished Professor in ISRO) and the eminent speakers included Dr A.Sivathanu Pillai (Former Chief Controller, R&D, DRDO), Padma Shri awardee Dr.Mylswamy Annadurai (NDRF, Chairman IEI & Former Director ISRO), DR.M.S.Vijayaraghavan (Former Advisor & Ex-Office Special Secretary to the government, Prime Minister Office) and others.
I was asked to deliver a brief talk on how the industries are impacted by the COVID crisis. In the YouTube video below you can watch my talk (about 10 minutes) starting at 4:22 hours:
I started with saying that startups (or small business) first should acknowledge we are in the middle of an unprecedented crisis and accept that there is a problem. Then I talked about three points, depending on their businesses maturity on how to handle this crisis:
- If you are in a Business that is generating cash (and/or) you have reserves (a big if for Indian small businesses), then you need to start conserving cash and aggressively go after your receivables/collections. Make all further spending moves cautiously, cut costs immediately – not necessarily retrenchment, cut back on all non-essential spending (marketing can be delayed unless you are serving a sector like healthcare which has an immediate need), try to explore avenues to raise money including long-term debt or raise equity so that you can build a reserve. This is the time to take hard decisions.
- If your business has already raised money, then you need to stretch it to last for 18 to 21 months. Shut down non-essential departments and action all cost saving mechanisms. Remember, things are not going to get closer to normal before mid/end of 2021.
- If you are going to be starting a business, then your only hope for cash is to bootstrap, if you can then start your business. Angel/seed funding will happen but they will far and few till the year end. See if you can delay the actual starting to a few months and use the time for planning many of the activities that can be done quickly once you start the business. Delay hiring as much as possible. Do the essentials yourself and with your founding team. Outsource/contract everything else, so that you don’t have monthly fixed expenses. Funding is not going to happen till the end of 2021, so be ready for a long haul.