Surviving COVID-19 as a Startup – Emerging Market Focus By: Ashish L. Gokaldas


During a time like this it is important that we share experience, to mitigate upcoming risks and rebuild our economies. This article is written primarily to young businesses with limited resource, experience, and mentorship. Personal experience stems from operating a business in Ghana, West Africa, and working in accounting & finance in both the UK and the US. I sincerely hope that these thoughts help in decision-making, staying calm, and focusing on building and investing for when times change for the better, because they will; it is just a matter of when. Given my experience and my analysis of how things may be over the next few months, I am certain that the following can inspire great thought.

Communication & Transparency is Key:

No matter the scale of business, we will all face some challenges ranging from cash flows, ability to perform operational activities (sales, deliveries, collections, labour), and in emerging markets something as simple as banking facilities and access to cash. Communication to stakeholders of the business is imperative; this means brief, straight-to-the point. 

Furthermore, this means disclosing to the bank where the company is unable to make the upcoming interest payment, disclosing to the team where the company cannot pay salaries (there is no way to sugar coat to anyone that they are not going to be paid during this time), expressing the steps that the company is taking to prevent spread of the virus internally as well as externally (to the end consumers). For example, restaurants have shared their hygiene routine, companies have given gloves, masks, and hand sanitizers to reduce spread, and some companies have halved their staff to maintain safe distances in the work place. The companies who can stomach a full closure have shut down temporarily. 

Employees & Looking After Your Team:

“By putting the employee first, the customer effectively comes first by default, and in the end, the shareholder comes first by default as well” – Richard Branson.

Anyone who knows me personally, can attest to the fact that I believe that the company’s employees are its biggest assets. Investing in them, reasoning with them, working with them, and growing with them is vital to the success of any business. During this time the leaders need to be the most secure, to help spread faith, good practice and positivity to all. 

Emerging markets in general do not have high GDP per capita income, and definitely salaries are not the best from a young startup with little resource. It is crucial to understand the journey both mental and physical your employee has to take to get to the job to perform their role. Let me share an example, Sarah wakes up at 4am to reach her work place by 9am, on her way she takes three different points of public transport that squeeze eighteen people (but are supposed to seat about twelve passengers, with no standing space). Sarah is twenty-five, she is the eldest sibling in her family, her father is bedridden due to illness, her mother is the caretaker of the family, and Sarah is the sole income earner. Sarah gets home at 8:30pm due to traffic and the locations she has to travel to as part of her sales role. 

In the above case, Sarah is highly exposed to spread of COVID-19 just by coming into work daily, she lives in a home with many people, she can only try to prevent, but not stop exposure, and she cannot afford to lose her job. By asking Sarah to come into work you are also exposing the rest of your team who may not have come through public transport. Likewise, by asking those who travel frequently for work to come into the office also puts the whole team at risk. Follow the self-isolation and quarantining guidelines to protect those under the roof. That is the duty of you the entrepreneur. 

Where your company can recover from it, tell your team to stay home, work remotely and absorb the cost as much as you can – yes, pay their salary. It is the ethical thing to do during this time. Likewise, help your team with good hygiene practices, supplies (where the company can afford), and inspire confidence; if you are in the frontline show your team you are in the frontline with them and sharing good practice (not hide in your office or your home). Of course, there will be some cases that are the exception to the above. 

Reducing/Stopping Sales (of non-essential items) & Reducing Credit/FX Exposure:

Going through this pandemic without any sales is tough but taking the right decision for your business sector is extremely important. These are some questions for the management team to discuss:1. Are my stakeholders (especially employees and customers) safe, if not, how can they be protected? 2. Are the items we sell essential, if not, do we have essential items in our product/service basket? For example, food, pharmaceutical, hygiene, and delivery services, etc. 3. Does the company have high risk exposures? Such as (but not limited to) foreign exchange loss due to depreciating currency, high credits/receivables in the market that may no longer be recoverable, and how leveraged is the business (ie high interest, payables, and other short-term liabilities)?

Here are some examples of decisions across different industries that could spark some ideation; a service company has stopped issuing refunds during crisis because of cash flow but is re-issuing service for a different date; due to future uncertainty they have also halted sales of future services until further notice. An FMCG distribution business that lived off of B2B credit sales has now gone direct-to-consumer, is doing cash sales, credit sales to credit-worthy clients only, and not accepting new credit clients to limit foreign exchange loss and to aid cash inflow by doing smaller more frequent sales with payment on delivery, as terms.

A wellness distribution company that primarily does credit sales has put out a promotion offering large discounting for payment on delivery, and is reducing quantity of goods supplied to reduce the credit exposure as well as foreign exchange losses. An electric appliance company has halted sales due to high exposure to foreign exchange loss. A marketing company has refused to promote non-essential items/services even for large existing clients, and is focused on promoting good hygiene regimens. Restaurants have offered discounts with free delivery direct to consumer. Some hotels are shutting down because it is safer to cancel the few bookings, ensure safety to their stakeholders, and cheaper to shut temporarily than to run at full cost of operation. Influencers, marketers, bloggers have shared that they are creating a content bank so that they have some time to resume their full time jobs once the pandemic is over.

This is not to say that all of the above will work for your business; if the FMCG and wellness companies above had short expiries they would have to move the product regardless to minimize loss overall. Companies with an existing cash flow crunch may find it hard to take these calls (keep reading to cash flow and investment sections). 

Cull & Cut Unnecessary Expenses:

Whether you like it or not you need cash right now and unless you are selling hand sanitizers, PPEs, masks, and other consumables related to coronavirus you will likely face a cash flow crunch (to some regard). In some of the different sectors discussed above revenue is down anywhere from 30% to 100%. 

If the business was spending $1000 on digital marketing management, consider pausing or at least reducing that expense; tell the team that your sending home to develop content daily for the business, tell them to conduct market research and take feedback from new and existing customers. Where cash outflow is going on transportation, limit the travel for only emergencies. This is also a great time to bargain, everyone is cash-strapped and looking for business! It is the perfect time to test your negotiating skills, shop around for lower interest rates and re-financing any existing business debt. The business can also reduce the costs of office supplies, rent out unused space, find a way to sell items like boxes, cartons, storage pallets if unused after production, tackle the “miscellaneous” expenses line by line, and hold out a little longer on larger projects (should financing be unavailable). Take advantage of discounts from paying bills in time (i.e. trade discount, payment discount – for example 2% net 30, and forex losses), you will save money for your business in the larger scheme of events. 

If you were on a postpaid line, time to shift to a pay-as-you go, if you were running the AC 24/7, time to switch it off from time to time, be strategic of fuel consumption and smart with supply chain and logistics – the business is in no position to waste anything, if you had multiple internet providers; consider switching to the one that is the most reliable (since emerging markets tend to face data outages frequently), reduce all variable costs as much as possible during this time and any cost that is avoidable (i.e. snacks and coffee for the office). This is the time to pool resources together with your network and potentially come up with a group of small businesses that survive the virus together. 

Managing Cash Flow & Keeping Physical Cash:

“Global Epidemic” is the keyword in managing cashflow; everyone is exposed to this virus and its negative effects. In your early stages of your business, leverage the strong communication skills you have with your stakeholders and you will be surprised how your company will come out stronger than ever before. Not everyone is cash-struck and there is always a piece of the pie for you, but you have to work for it. 

The service business (as aforementioned) was initially issuing refunds for cancelled services until it could not do it anymore. Aside from informing customers that they will issue the service at a later date and take on date changes, the business also requested that everyone in the firm (including directors) take a 50% pay-cut until the pandemic is resolved, to which they agreed. The FMCG distribution company has negotiated some extended credit terms from the supplier for some of the slower moving products (i.e. 120 days vs the agreed 60 days), therefore more time before that major cash outflow. Due to the discounting the wellness company offered, customers are taking advantage and paying cash; while the wellness company is giving some profitability for cash inflow immediately. Similarly the other services (i.e. marketing and restaurants) are giving discounting, running promotions, and giving free deliveries for immediate cash. This is also a good time to follow up on outstanding and aged receivables; though those companies may also not be able to foot the whole bill, they will likely consider part-payments. Where you have some cash, consider paying overseas bills before the FX rate worsens making it harder to meet the company’s commitments. 

Unfortunately, depending on where you live and how advanced seamless payments are, holding one-months’ worth of expenses in cash on hand is not a bad idea. In some emerging markets, times like these put a huge strain on the liquidity in the country. This does not mean that all the money in the account should be withdrawn, but just plan for the unexpected, where it may take a full day or two, to cash a cheque or make a withdrawal, since the country does not run on electronic banking and seamless transactions. If you are in a more developed area where mobile payments, card payments, and bank wires apply to you and every vendor accepts this, then it does not apply to your business. 

Considering Investments, M&As or a Buyout:

Unfortunately if none of the above are working out and the business seems to be going under, rethink the strategy. Is there another tranche of investment that you were planning to execute? Maybe this is the time to keep the business going. If not, is there a partner you would like to bring onto the business? This is the time to reach out. Would you be interested in selling out your business at this stage? These are all questions to consider once you come to terms with the state of the business. 

A lot of times in emerging markets you see a few similar ideas with almost-identical visions for their startup but they do not want to work together. This is a great time to pool the resources together especially if there is a symbiotic relationship which could lead great synergies between the two. Considering a merger in this case may be life or death for your business. 

However, be ready for an attack from the investor, buyer or potential partner because they will negotiate the best discount possible because of the global risk exposure due to the virus. Know your worth, work on a reasonable valuation, and watch some episodes of Shark Tank, Dragon’s Den, and the McDan Entrepreneurship Challenge before negotiating with investors. 

Infusing Technology & Investing in Innovation:

Personally, I am not tech savvy, but I do encourage remote working within my teams, a flexible schedule; it does not always work due to the stereotypical work ethic in the local environment. I am proud to say majority of the startups that I have seen as well as some I am currently mentoring, have done a great job using applications and software to handle their entire administration of their value chain and are paperless already. Applications like Ozé, Kudigo, Tally, QuickBooks, and SalesForce are already in use by a lot of young businesses. 

What I do not see startups doing so much (myself included) is reading, educating ourselves in our industries and segments, or growing in skillset. To end this piece, I would like to share some books I plan to read over the next few months. 1. Making Futures by Sangu Delle. 2. The 5AM Club by Robin Sharma 3. Crushing It by Gary Vaynerchuk 4. Blue Ocean Strategy by W. Chan Kim & Renée Mauborgne. 5. 12 Sales Secrets by Daniel Sarpong

What are your thoughts? How is your business surviving the pandemic? How is your company dealing with employees and remuneration during this time? Is the business innovating? Are you developing your skillset, your knowledge or your yourself in any way?

It is a time to help one another, a time to join forces, a time to give and to share what you do have with those who do not. 

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