In uncertain times, such as during the coronavirus (COVID-19) outbreak, even the largest businesses can learn and thrive by returning to a startup mentality.
It might be a long time since your business was a small, focused team, bent on survival as much as ongoing success.
But these are exactly the startup characteristics that will help companies weather the current storm of unpredictability.
Here are 10 ways to think like a startup and rediscover your entrepreneurial agility.
1. Remember that cash is king
Westermans International Ltd is a welding equipment business with a global footprint but strong family roots.
Claire Spillane, the company’s financial director, says: “Peter Westerman, the founder of our business, and my dad, drilled a message into me from the first day I joined the firm 30 years ago.
“He said: ‘It’s those with money in the bank that will survive.’ I’ve seen first-hand how true his words are.”
Westermans has only furloughed staff who did not want to work on health grounds and has pivoted to move with market conditions.
Right now, it’s contributing to welding new hospital beds and housings for medical gases. The cash cushion has been crucial.
Alexandra Poole, a business transformation consultant, coach and board trustee, says: “Thinking like a startup means thinking like it’s your own money: the positives coming in must be more than the negatives going out.
“It’s not rocket science, but in larger companies, those simple rules can be obscured. To look after your cash, don’t make what you can’t sell, and don’t order what you don’t need.
“That requires a rigorous examination of your supply chain, because when demand changes, you must change the profile of your orders.
“I see companies with dead inventory in the millions, because they haven’t connected sales and operations.”
You may need to think about data to fully gain visibility of your supply chain, but it will be essential in regaining that startup focus.
2. Prioritise agility – and that means customers
Poole says: “Agility has been a buzzword for many years and we think that it means the ability to change direction rapidly.
“My work in business transformation comes from a background in lean manufacturing, which is the philosophy of doing the right thing at the right time.
“What is the right time?
“The underlying principle of lean is ‘only the customer defines value’.
“You must understand the value that your customer seeks and reduce waste in delivering it and reacting to it as it changes – sometimes very quickly. Startups do this very effectively, whereas large businesses get bogged down in their own strategies.
“To be agile, find ways to reconnect with your customers.”
3. Focus on the basics – anything else is immaterial
Startups focus on doing one thing exceptionally well.
Larger businesses have multiple lines, refine their customers into different segments, and seek incremental revenues.
They have short, mid and long-term strategies, and the longer-term plans may feature spin-off teams pursuing side projects.
All of this must be put to one side (for now).
Focus on delivery of the absolute basics to the largest possible customer community, in order to bring in stable revenues until predictability returns to the business.
4. Discover your entrepreneurs
James Pinchbeck, Partner at Streets Chartered Accountants, says: “In the words of Winston Churchill, ‘A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.’
“Entrepreneurs don’t see barriers, they see opportunities. Their startups identify a problem and can then exploit it, with the resources they have, in a timely and efficient manner.
“The way we do business has changed significantly and we’ve been forced to do things differently – our supply chains, operations and even attitudes have all been disrupted.
“So for me, success for larger businesses will come from entrepreneurialism: finding the people in the organisation who have that entrepreneurial mindset but still want to work in a larger, more structured entity.
“Find those people and give them the freedom to behave like entrepreneurs in startups: necessity is the mother of invention, and these people will be the source of new ideas.”
5. Think in days, not months
When the world is changing around you, there’s no point relying on 12-month strategies. They will be out of the window before they are printed.
Spillane, from Westermans, says: “Due to the size of our factory, we have been able to work to the social distancing guidelines.
“Some of our incredible engineers have even worked through the night to ensure their safety. Everyone has pulled together and we have settled into a new rhythm and norm.
“This situation, however, is constantly under review. Not because enquiries have dried up, but because the supply chain we use is closing due to social pressure and staff absences.
“Air freight prices have tripled in a week and ports are restricting ships or closing altogether, making our exports harder to achieve. We make it our business to adjust to circumstances every day.”
Startups have two key qualities:
- The ability to look outwards to spot trends and market changes rapidly.
- The faith to react to those trends without all the data that larger companies traditionally rely on.
In times of change, ‘constant review’ must be the default.
6. Revisit what you qualify in/out for
Growing businesses learn to drop out of lower-value sales opportunities. The value of a sale or bid/tender opportunity may not usually justify participation.
In times of change, those rules should be revisited.
It won’t suddenly be appropriate to wade into every low-budget sale, and there’s no need to fall into a ‘beggars can’t be choosers attitude’, but reviewing your thresholds by a modest percentage will make sense.
If you have reviewed your salaries, operations and processes to cut costs, it’s likely that the financial profile of viable work opportunities has also changed, too.
7. Rebuild your team around a vision
Large businesses invariably fragment into departments and projects, because in normal times, it’s impossible for everyone to function without autonomy.
But the cost of that autonomy is complexity, and in exceptional times, leaders must gather the troops around a common vision.
Claire Ellis, managing director of strategic marketing agency JPC, says: “Complexity grows naturally in large companies.
“But at times like this, leadership means establishing a strong, credible, challenger vision – a clear, simple and exciting message that employees, especially those working remotely, can understand and buy into.”
It will be easier to succeed when everyone is pulling in the same direction.
Pinchbeck of Streets Chartered Accountants agrees. He says: “In a startup, the passion is the same as for a football team. It doesn’t matter if your team isn’t doing well – you’ll stick by it and see it through.
“That loyalty is a huge asset – and one that gets lost in larger businesses.
“Build a vision that rekindles that sense of passion; empower your people so they feel they have real skin in the game.”
8. Lead by shortening the communications cycle
Business transformation consultant Poole says: “A key feature of startup behaviour is urgency. When you have few resources, everything is urgent.
“Startup leaders must therefore co-ordinate effort in the resources that they do have: getting the right people to do the right things.
“To drive action, employees need clear communication, and this is often lost in the multichannel environment of a larger business.”
If you want action, cut through with rapid, straight-talking communications that set a clear and unambiguous direction, outlining immediate priorities and how you expect your teams to contribute.
9. Put data to work – fast
Many corporate projects require the collation and assimilation of multiple datasets, and this is something in which growing businesses invest heavily.
But corporate agility in uncertain times calls for the headline figures only.
Startups have a few key performance indicators (KPIs) and stick to them. Larger businesses may have access to far more nuanced data but should follow the startup path and focus on key metrics alone.
Invest in simplified reporting that extracts essential data and puts it in front of all decision-makers.
Less is more.
10. Use your connections
Entrepreneurs thrive on the connections they make and the advice those connections can offer.
From providing the lessons of hard experience to being a shoulder to cry on, a startup entrepreneur’s network of advisers are a powerful resource.
But when did you last speak to your accountancy professionals, insurance brokers, property advisers and the like, beyond business as usual situations?
Those conversations will help you benchmark other businesses’ approaches to the challenges they face and often generate solutions to the seemingly insoluble.
Coronavirus and your business
We’ve gathered information and resources to help navigate this situation, including tools and webinars, to help you understand what financial support is available.