How startups can survive and thrive in times of crisis

Despite all the concerns about the future, linked to the climate, Covid-19 or the professional world, the creation of start-ups is multiplying. Last year, nearly 5.4 million business requests were filed in the United States – more than any other year on record, according to the Census Bureau. That number represents a 53% increase from 2019, when the idea of ​​a global pandemic was little more than the plot of a summer blockbuster.

At first glance, this seems counterintuitive. Why did so many new businesses spring up during one of the biggest economic meltdowns in recent history?
It may have something to do with the cynically optimistic nature of entrepreneurs. Their cynicism points out the problem or points the way, and their optimism empowers them to act.
With so much time at home during the pandemic and so many reasons to dare, it makes sense that many aspiring entrepreneurs have taken stock of their lives and put off dreams and decided it’s time to skip no.

Of course, many other real-world factors contributed to this phenomenon. First, the need. During the pandemic, 23 million people were suddenly unemployed in the United States and 35 million struggled to pay rent. Another reason was capital. A market boom and a glut of stimulus checks pushed household wealth to historic highs while interest rates were at historic lows, making capital cheap and widely available. With fewer outside perspectives, more time at home, and more savings and financing opportunities, 2021 was the perfect year for entrepreneurs to start betting on themselves.

But that changed in 2022. After record inflation and the worst first half of the market since 1970, we entered the toughest fundraising climate in more than a decade. Companies, especially late-stage startups, are doing everything they can to avoid having to raise funds during this dreaded period of round down, and early-stage companies are struggling to show a more efficient sales model and strong revenue retention to attract investor interest. Everyone is looking to expand their leeway, which is proving more difficult than usual given the numerous challenges specific to the crises mentioned at this particular time.

The challenges that threaten startups

Inflation has put pressure on prices, supply chain problems are threatening sales and a labor shortage has made it difficult to find and retain talent, not to mention the looming recession. All these factors make founders feel like a Herculean task when the situation is already dire (90% of startups fail, 10% in their first year, and 70% between their second and fifth year).

But it is not insurmountable. In times of uncertainty, there are many things leaders can do to not only survive but thrive.

Don’t you believe it? Consider the Great Recession of 2008, the deepest recession since World War II and, coincidentally (or not), the same period when Venmo, Instagram, Slack, Uber and WhatsApp were founded. Constraints are said to promote innovation. They also promote resilience and focus on successful start-ups.

So how can you be sure you don’t fall into the latter category?

What all successful startups do

There is a plethora of advice for founders, but the leaders of successful startups are almost unanimous on the following points.

  1. Create a solid business plan and test it with research.
  2. Don’t try so much to avoid mistakes as to learn from them; negative knowledge is very valuable.
  3. Listen to your customers (especially those who hate you).
  4. Make sure there’s a big enough market for your product (again, do some research).
  5. Be relentlessly dogmatic about your vision and stubbornly pragmatic about how to get there.

These are prerequisites for success even under the most favorable conditions. But when the water is cloudy, it doesn’t matter how good your boat is if the person at the helm doesn’t know how to steer it.

What all great leaders do

Great companies are led by great leaders, and great leaders are transparent and straightforward with their teams. They communicate with them, motivate them and inspire them to make significant progress every day. They do this by telling you what it’s like and bringing in the right people at the right time to chart the way forward – as a team – rather than sitting in a tall tower pretending to know everything. These leaders inspire confidence and empower talent, ensuring everyone is focused on the right thing and best equipped to make the biggest difference possible.

Great leaders create winning cultures by instilling passion and innovation at all levels of the organization to solve problems creatively.

Business leaders who cannot offer salaries as high as those offered by more established organizations can focus on training the talent they have to meet their needs or automating tasks to reduce costs.

Great leaders learn from past mistakes and aren’t afraid to think outside the box or make risky decisions. They don’t get carried away by hypotheses; they focus on facts and, above all, act.

When they know a product is a failure, they either rebuild it or abandon it altogether. When they make a bad decision, they correct it right away rather than going back to it.

It is not enough to overcome adversity. Leaders must overcome obstacles to turn obstacles into opportunities.

When leaders demonstrate these qualities and empower their teams to collaborate, contribute, act boldly and make mistakes while maintaining a unified vision and purpose, startups are much more likely to not only survive but thrive, even when the context doesn’t seem like it. ideals.

Translated article from Forbes US – Author: Steve Shillingford (Founder and CEO of DeepSee.ai.)

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