Spot New Opportunities (Leading your Startup through CRISIS Step #6)
Spot New Opportunities — this is what you were always good at as a founder.
For the founders and leaders of start-ups, the current public-health and economic crisis has been by no means easy. However, there could be ways to turn a negative into a positive by spotting new opportunities. The only thing we know for sure is the world will look different coming out of the crisis than it did before the crisis. But these changes can be viewed as opportunities to get ahead of your competitors. The start-ups that can change and adapt to this new reality are the ones that will survive and thrive coming out of the crisis.
Here are a few ways that business leaders can adapt and find new opportunities to ensure they come out of the current crisis in a position to succeed.
Most founders have achieved a certain level of success by being able to pitch effectively. However, you must now reconsider whether your pitch will be effective in the new reality. Things have changed during the crisis, meaning your old pitch could be tone-deaf or out of date. Reassess your pitch given the climate; in fact, you may have to go back to the beginning and start your pitch from scratch.
Think about a concrete customer. Don’t get ahead of yourself in thinking about your customer base or the market as a whole. Rather, think about why you started your business in the first place. Consider how that matches up with the current needs of a customer, as well as what that customer is willing and able to pay. How do the needs of your customer match your capabilities of a startup? This can help you determine the right pitch for the new post-crisis world?
At this time, you’ll also have to reconsider your focus. Are you going to be able to focus on growth at all costs the way you might have been doing before the crisis? Will it be more prudent to maintain a certain level of profitability? Keep in mind the way that your economics and ability to raise money from venture capital have changed during the crisis. Don’t assume that you can pick up where you left off.
Odds are, you won’t be able to follow the grow-at-all-costs model coming out of the crisis. There could be parts of your business that are bringing in revenue but don’t make sense in terms of profit because of their costs. Take a close look at your core customer segments, core products, core channels, and core geographies. Most likely, all of them are producing revenue. However, it’s possible that only one of them is driving most of your profits. Meanwhile, there could be another one where you’re taking a loss.
Just because you’re bringing in revenue in one core area doesn’t mean you’re bringing in profits. It’s possible that you’re funding debt, which you can’t afford to keep doing. If you assess the profit vs revenue within your business, you can locate what is actually driving your business. This will enable you to come up with a new business model that will put you in a better position to succeed post-crisis.
The post-crisis climate figures to be a buyer’s market. This will create new opportunities to be aggressive in ways that can help sustain your business for the long-term. For example, many supplies could be in dire straits, making them open to renegotiating their contract. You could offer to extend your contract by a year or two in exchange for a substantial discount. Most suppliers will consider such an offer, especially if you’re able to put cash upfront.
You can also take advantage of the high unemployment created by the crisis. Currently, there are a lot of talented workers who are on the market looking for a new position. They might even be willing to accept a lower salary than they would have before the crisis. It’d be foolish not to go after some of this talent if you think it can benefit your startup.
At the same time, there will be new clients available for you to pick up because some of your competitors are struggling. Other competitors may have already gone bankrupt because they weren’t able to adapt during the crisis. Even if there is only a rumor that one of your competitors is struggling, now is the time to strike. You can try to poach their clients by showing them that you’re ready for the changes that will come after the crisis and can provide stability over the long-term.
Finally, advertising is one area where you can get a leg up on your competitors in the post-crisis climate. Most companies have made the smart move to cut back on marketing as a way to cut expenses during the crisis. But once you’ve found stability, marketing with a new message can be a great way to take advantage of advertising costs being down because of the crisis. Not only will it be cheaper to advertise, but there are fewer advertisers right now, making it easier for your new message to be heard.
Consolidating will be a critical part of succeeding after the crisis. Finding opportunities to consolidate could end up being the difference between the businesses and survive after the crisis and those that are left in the dust. As mentioned, one of the best ways to do this is to go after the customer base of your competitors that might be struggling.
The post-crisis climate could also be a good time to consolidate through acquisitions. If one of your top rivals is struggling, they could be open to a buyout that would help you to consolidate the market or acquire key resources that can be useful to your business over the long-term. Given the uncertainty the crisis has created, come businesses know they may not survive. This could lead them to accept a buyout that’s a lot lower than it would have been before the crisis. Even if this requires additional financing, most investors would be open to supporting a buyout if it means fewer competitors and more pricing powers.
Geo-expansion is another option. If there is a similar company that’s active in a country or market where you’re not active or successful, now could be the right time to combine forces. If both operations have their own focus, integration should be easy and beneficial for all parties. Again, many startups know they might not be able to survive without consolidating, creating a lot of opportunities to merge with other companies or acquire key resources.
In closing, the current crisis may have caused great hardships, but it has also created opportunities. Of course, all business leaders will need to reassess their situation, adjust to the new reality, and do everything they can to sustain the business through the crisis. However, on the other side of the crisis, there will be new opportunities to improve your business that didn’t exist before the crisis. The business leaders who are able to spot these opportunities will be the ones who survive and thrive in the long run.
To get started right away with bridging the crisis in your startup, go to crisis. We put together all resources there that we’ve mentioned in this video: The crisis action plan, a one page crisis bridging plan, other videos, and more.