Act like a startup to survive & sustain
Key Startup Characteristics May Help Businesses Recover
- This article outlines the prominent operational differences between startups and traditional businesses or SMBs (small & medium businesses).
- It points out the key lessons that businesses need to learn from the pandemic and the characteristics of startups that SMBs or established companies can adopt to survive the present pandemic and sustain beyond.
- In the end, the article presents an overview of the ways to innovate quickly based on the type of business.
There is a popular belief that big or established companies should not act like a startup for several reasons.
The first reason usually given to justify this belief is that big companies (even SMBs) already have successfully running business models and product lines and they fail to look beyond. That is to say, they miss the agility.
Secondly, these firms cannot innovate at the speed of a startup either because multiple iterations for product development is not possible due to complicated or expensive prototyping cycles for some of their products or it is sometimes difficult for them to develop advanced technologies needed in their products or service without well-equipped state-of-the-art facilities. Thus they tend to believe that they cannot act like a startup.
Current scenario & learning from startups
In light of the present pandemic situation across the world, well-established businesses have seen a dip like never before. Many of the business sectors have been forced to shut while the others are bound to struggle to retain or generate cash to cover their expenses.
Looking at the present scenario, the situation is going to remain more or less the same for a few more months. So there remains no to very little scope in fine-tuning the existing business model, value proposition, and business operations especially for those who have been traditionally running their businesses for decades.
There are two very important lessons that businesses especially SMBs need to learn from this pandemic:
Firstly, the model that they have been following for running their business before the outbreak of COVID 19 will no longer apply in the post-pandemic world. They must plan to make quick changes in their offering (product or service), business model, and operating model with the inclusion of technology and innovation that can be easily absorbed in their business culture.
Secondly, they should make innovation central to their business where all partners, resources & channels cohesively work to keep a wheel of innovation running forever.
The questions that may now arise are
- how to start innovating in business? and
- which technologies can help businesses adapt quickly to the changing environment especially during the present outbreak?
These questions have been answered at the end of this article. But before that, let’s first examine how the two aspects stated above are strongly rooted in any startup culture.
If we go by the definition of a startup, it is an entity that solves a problem or fills a need in the market that was either not identified by other businesses playing in the same or related sectors or others simply failed to execute a profitable business through that need/ problem due to many factors like lack of enough customer discovery & validation, misjudgment of needs, problems, etc.
Following are the major insights into the operations of a startup company:
- Startups act proactively to the changing needs of the market and accordingly make necessary changes in their value proposition, business model, or at times even enter into new markets with entirely different value propositions if their plan A fails.
- Successful startups adopt a lean-approach. Indeed the actual journey of a startup begins with customer discovery and validation where they validate and subsequently refine their business idea based on the “build-measure-learn” cycle. They build the product or services based on feedback from the market and then refine the product through the lessons learned. Even when they manage to establish a profitable business with the potential of growth and sustainability, they keep evolving their products/services, channels, resources through a feedback loop wherein they learn, build, relearn and rebuild based on regular feedback from the market (customers). Changes are made accordingly in their offering, cost structure, revenue streams, or in other components of the business model.
- Startups do a very thorough competitive analysis intending to have a sustainable competitive advantage usually in the form of technological innovation (though the competitive advantage can also be in terms of low cost, lead time advantage or entirely new business model) They analyze the areas in which they are different from their competitors and how the key-differentiators in their offering can prevent the competitors from capturing their market share.
- They give significantly high importance to team building rather than single-handedly planning and executing. The team members of a startup have a varied skillset and area of expertise. They complement each other and fill the gaps with their respective skills & expertise.
- Successful startups (whether software or hardware-based) strive hard to make their systems efficient and more productive. Since most of the startups run short of cash during their early stage, they make use of technology to achieve higher productivity in business operations.
Considering the present scenario where disruption is seen in businesses all around, SMBs (small and medium businesses) can still increase their chances of survival by judiciously acting upon the first point stated above (being proactive to changing market needs) and striving hard to make their culture tech-friendly. Even low-cost automation can save quite a significant amount of time or bring down the expenses that are otherwise tough to get rid of.
The following portion answers the two questions that were left unanswered at the beginning of this article.
How to innovate fast?
All of the businesses whether big or small can be broadly classified into the following categories:
Category 1 Where the products or services offered by the business can find new markets or can be restructured into other forms to solve a completely different problem or fill a need gap in the demanding markets.
Way to innovate: SMBs (small and medium businesses) falling under category 1 should adapt fast and restructure or re-engineer their products or services that can cater to the needs in present times for sectors like healthcare, essential goods, emergency services, etc. If you want to know the methodology to restructure your offering and generate profit even during the current outbreak, you may read our article on how to find a profitable business idea during COVID-19 pandemic.
Category 2 Where the offered product or service cannot find new markets or its restructuring is not possible.
Way to innovate: Here the businesses should do:
- SWOT (strengths, weaknesses, opportunities, and threats) analysis of their entire business model. The analysis must be done separately for the value proposition, key resources, key partners, key activities, distribution channel, cost structure, and revenue stream. It helps them to know their strengths and weaknesses based on which they can redesign their business model and venture into a market domain where the new opportunities are easy to capture with the desirable strengths identified through SWOT.
- PEST (political, economic, social, and technological trends) analysis. It tells how the stated factors viz. political (like legal, statutory), economic (like economic growth, inflation), social (like change in lifestyle, education), and technological (like increase in internet usage), will affect the performance of your business in the long run. It helps businesses to plan changes and make a clear forecast for their business activities in light of the above factors. The tool gives SMBs the confidence to make a better judgment for their offered products or services by letting them know the right time to pivot or enter into a new domain.
Technologies that can help businesses adapt
The low-cost digital technologies and automation can be included in business operations for saving time and executing operations remotely.
- Small & medium businesses can use SAAS (software as a service) platform offered by many software solution developers to automate a number of their operations like billing & payments, logistics, etc. Here the businesses do not have to pay an upfront price for the software. Rather the payment has to be made on a yearly, monthly, or hourly basis based on the schemes offered by SAAS provider.
- IoT (internet of things), AI (artificial intelligence), ML (machine learning) & AR/VR (augmented / virtual reality) based solutions are also offered by many startups and solution developers for manufacturing and service-based industries. Predictive maintenance of machines based on IOT, automated assembly line solutions, machine learning-based quality control, augmented/ virtual reality-based industrial training are few of them. Loan or funding schemes offered by the government to help businesses implement such digital and automation solutions in their industries can be seen on the respective SMB or SME support portals of various countries.
To Wrap Up
The present pandemic will change the course of business forever. Entrepreneurs and small business owners will have to incorporate a newly evolved way of working in their operations to survive. But there is a silver lining for such businesses. The culture of innovation and agility will help them to not only survive this outbreak but also emerge as sustainable businesses in the long run. ‘Startup way’ is going to be the new mantra for SMBs!
Do you feel there is something more to be included? Kindly write to us. We will be more than happy to consider your valuable suggestions.