Photo credit: Witrix Company
This is an extraordinary mail because of extraordinary circumstances.
Most of you have probably already realized the severity of the lockdown/COVID/CORONA situation, while some are only starting to get an overview of what this might mean to your business.
Regardless none of you have tried to steer a start-up through this kind of scenario.
Since the external shock from the Coronavirus looks like it will lock down a major part of our societies and markets, in which your startup companies operate in, there are a number of measures you need to consider.
On Sunday the Danish Government made a couple of aid packages – but to a high degree they are not helping out startups. Nevertheless, familiarize yourself with the conditions of the new credit, tax & VAT. Some might also be eligible for sending home employees home with pay.
Some of your businesses will only be lightly touched by general circumstances and there might even be some, that can benefit from shifts in paradigms or sentiments and moves toward more online business – be sure to reflect and build strategies that can activate these new possibilities.
For almost all of you, however, the professional thing to do as leaders of startup companies you should look at the range of possible outcomes of this crisis.
Contingency plans are budget-based plans for survival in uncertain times. It requires a review of all parts of the business to analyze cash burn and the runway of the company. The most important things to look at in your companies are:
Time is now to follow up and (aggressively push) for debtors to pay outstanding bills. Be aware that both large and small companies that have been good partners before, might start to prioritize their creditors and might choose to put Start-up far behind in the line.
Prioritize your creditors
Look at who you might push forward in time – can you make a VAT deal with ‘SKAT’ to postpone your current payables, do you have public partners that can wait, etc.
Talk to your advisors
Whether your mentor, clever people in your network or your investors – talk, ask debate and read up.
Look into the help packages
Read up and talk to each other and see if you somehow can get a hand from the public sector help package.
Prepare for hard times – worst-case and other scenarios
Especially if you have employees, physical shop/office or other heavy cost structure – look into how you can minimize cost including getting out of contract, re-negotiating rent and letting go of employees in the cheapest possible way, etc.
Make scenario – for complete shutdown / partial shutdown / 2,4,6,8,10 weeks of shutdown.
Finally, when you have made your plan, bounce it off on your peers, advisor or mentors.
Make sure to communicate to all your stakeholders, but not in the same way – Investors need to know that you have thought about how you are going to take care of their money, partners need to know that you look forward to continuing collaboration after the shutdown and your customers need to know that your biggest wish is to return to serve their needs.
The obligatory disclaimer: We at CSE staff are not in a position to be an advisor for you, nor do we have the qualification to be knowledgeable about all of your businesses, but will be happy to make sparring on your ideas, point you in direction of sources of knowledge and to match you with other start-ups in the same situation, etc.
Please read these articles to help you: (NB! Most are only in Danish!)
You all have different situations and that there is no ‘one size fits all’, so please do use the experts and network around you.
All the best, the CSE Staff.