Coronavirus Crisis: Layoffs should be last option for growing Startups

Coronavirus Crisis: Decision Making during Hardships

It's so evident that the Coronavirus crisis has been impartial, affecting businesses that are large-scale and SMEs. Entrepreneurs are more than worried about the challenging crisis. Hence, it isn't surprising to see thoughts such as laying off employees emerge! But what do the investors and veterans of the industry think about handling the obstacle? 

Business Continuity is a major issue as every work is not remotely possible. This has led entrepreneurs to think about Plan A, Plan B, Plan C and so on. 

According to Pranjal Kumar, CFO, Bertelsmann India Investments, ensuring the BCP at its portfolio businesses is important, so that they do not lose any momentum. He also added, “Our suggestion to the portfolio is that they protect their base offering, conserve cash, and focus only on those initiatives that will give them robust growth and help regain momentum post these 2-3 months of slowdown. Keep moonshot initiatives on hold currently.”

Coronavirus Crisis: Survival for Future Growth

The second most important fact troubling the founders is the expense management of their company. According to V Balakrishnan, Chairman, Exfinity Ventures, with revenues impacted, startups that have cash and control costs will remain strong. He also added that today it is more a case of survival rather than a case of growth.

Sanjay Swamy, Managing Partner, Prime Venture Partners, says, “Since the impact of the current slowdown can be seen across 2-4 quarters, discretionary (marketing) expenses should be evaluated. It is important to first gauge if the customer is in the right frame of mind to buy your product or service. Money should be used more prudently in these times. I advise all startups to plan to get to break-even with the money they already have.”

Keep aside Profit making for sometime

Another major problem impacting the citizens is employment. Unsurprisingly, entrepreneurs look at the larger picture and make hard decisions such as letting go of employees to survive this crisis. Things are turning grim within the startup ecosystem, according to many experts.

Contrary to this, Siddarth Pai, Founding Partner, 3one4 Capital believes that laying off employees should be the last go-to solution. Pai added that we should take care of people's lives in this critical situation. No recruitment will happen during these days of lockdown. Startups should moreover rely digitally upon to recruit employees. 

Concluding with a positive note, some of the VCs comment that this is the best time for startups to look inward. It will affect much-needed changes and emerge stronger when this crisis is over.