Tech in The Time of COVID 19 — The 5 Biggest Challenges Businesses Are Facing and How to Handle Them
August 26, 2020
Despite seemingly insurmountable challenges, tech startup leaders can create their own “next normal.”
The novel coronavirus outbreak has created issues for virtually every business segment in ways that none of us could have imagined, and tech companies are certainly no exception. Leaders in the tech startup arena are not strangers to dealing with uncertainty. They need to harness their entrepreneurial nature and agility to navigate previously unforeseen challenges and ensure their organization’s future.
1. Moving Past Analysis Paralysis
During our current crisis, companies reacted quickly and efficiently to ensure that customers’ needs were addressed. They changed how they communicated, delivered, and sourced. But beyond responding, organizations, especially those in the tech space, must be agile so that they can move quickly to take advantage of potential opportunities. However, it is challenging to remain proactive in the face of overwhelming uncertainty, daily fluxes in information, and very high stakes. When faced with potential “analysis paralysis,” leaders can maintain momentum by making small, actionable decisions that lead to more substantial commitments. This process will be helpful now and will expand your ability to address challenges in a post-pandemic world.
2. Raising the Funding Bar
Raising funds for a startup is no easy task in the best of economic times. Economic insecurity, combined with limitations on face-to-face meeting opportunities, has significantly impacted the funding landscape. According to CrunchBase, venture capital startup funding dropped 12% in Q2 2020 from just under $30 billion from the first quarter, and 18% from a year ago.
So besides honing a virtual pitch, how can your firm improve its chances of securing funding in the near future? Charles Yu, a principal at Bling Capital outlined in an Observer article how some founders were able to gain a funding edge.
- Understand your cash burn — Show funders that you not only have a firm grasp of your burn rate over the next 18–24 months but also know what adjustments to make in various scenarios.
- Pandemic-proof your channels — Take time to understand how COVID-19 impacts your customers AND their channels to determine what adjustments may need to be made to your product and customer mix, delivery model, and even payment methods/terms.
- Show profitability — In a shrinking funding environment, startups that show positive cash flow will be more attractive to funders as they know that their risk is reduced when your survival is not entirely dependent on their capital. Focus on the right Key Performance Indicators — Yu shared what metrics he looks for in a well-positioned business:
- A decrease in customer acquisition cost (CAC) means that you can acquire more customers for an incrementally decreasing spend.
- Increased customer retention translates to a higher customer lifetime value (LTV.)
- Having the ability to increase your pricing structure without impacting retention or customer satisfaction allows your organization to focus on growth while also improving your margin to support future scalability.
- Have the right talent/resources on board — Having access to the right talent mix and technical resources will keep your organization moving forward and ensure funders that you are poised to scale.
3. Engaging Customers
Just as there are more challenges to the funding process now, the same is true for business development. The good news is that you still are offering a tech solution to fulfill clients’ needs that will help them achieve their goals. It is more critical than ever to focus on the fundamentals of building strong business relationships during challenging times.
- Be a trusted resource — Keep the lines of communication open. Ask your clients what challenges they are experiencing and offer guidance where appropriate. While the sales cycle might be longer, customers respect those who were there for them during a crisis.
- Get creative — When you can’t meet customers in person, find new ways to break through the noise and engage with them. Do you usually connect through email or LinkedIn? Leave a voicemail or send a text. Create a quick video of tools and tips, share a successful user story, conduct a survey, hold a live webinar, or create an “insiders” FAQ forum.
- Be Authentic — Take the opportunity to humanize your business relationships. Embrace the awkward nature that comes with these unsettling times. Reach out to your clients and prospects and open the door to deeper levels of conversation. Ultimately, people do business with people, and by sharing your vulnerability, you can make your clients more comfortable with you.
4. Rethinking Collaboration
By their nature, startups are built from the ground up by small teams, working closely together. How do leaders maintain the collaborative process, ensure productivity, and preserve the organizational culture with a geographically dispersed team?
As the in-person informal office conversations cannot happen, organizations need to foster intentional connection. Utilizing tools like Slack, Hangouts Chat, or Microsoft Teams can encourage deeper engagement among team members. Many organizations have increased team social bonds by using the same software to help employees communicate and to create company-wide social events.
While some may wholeheartedly embrace remote working, leaders need to realize that at times, some of your team may become overwhelmed as the lines between work and home responsibilities are blurred. Frequent check-ins to openly address concerns can be a considerable boon to employee satisfaction.
Focus on Systems
What worked then may not work today. Small startup organizations, especially those that have not fully developed workflows, need to focus on increasing project visibility and building systems to formalize the operational structure and workflows. Regular project status updates can ensure that all are up to date and are working towards the same strategic goals.
Technology solutions can also be used to humanize systems in a distanced world.
Tim Barber, Cofounder of Growth Sites, noted that his team improved their social interactions by utilizing automation software. “Before we’d run through checklists in meetings or on the phone, but now we use a sign off on checklists at our own pace. By automating communications around work, teams can interact more thoughtfully when something truly important needs discussing.”
Humanize with Intention
A distributed workforce affects everyone differently. Leaders need to not just focus on following up on projects and business tasks, but also on the people doing them. Create systems and structures to collect input from employees. Provide them the opportunity to share feedback and encourage transparent organization-wide conversations — increased satisfaction results when staff has the opportunity to share and know that their options are valued.
5. Dive into Data Security
Focusing on funding, customer engagement, team collaboration, employee communications, and productivity will undoubtedly keep your organization moving forward. However, the transition to work from home arrangements has created significant data security issues that can put your organization at risk.
Three key factors should guide an organization’s efforts to keep its data secure, the CIA Triad, confidentiality, integrity, and availability.
Confidentiality refers to data privacy and providing access only to those with approved access. Data encryption is a standard method of ensuring confidentiality.
Integrity refers to the consistency and accuracy of data over its life cycle.
Availability ensures that the data is accessible when needed and by all who need it. Ensuring availability often involved redundant systems and creating backups.
While all of an organization’s information is important to its operations, certain types of data are particularly at risk because of its value to others. This includes personally identifiable information, a company’s intellectual property, sensitive government information, or financial data. There is significant concern about the amount of data that is potentially at risk now that many more employees in the Healthcare, Financial Institutions, and Government sectors are working from home.
So how do you ensure that only your team has easy access to YOUR data?
- Train, train, train — Kaspersky security experts found that 52% of businesses admit that employees are their biggest weakness in IT security, with their careless actions putting business IT security strategy at risk. Employees can cause breaches in data by forgetting to lock their screens, falling for phishing email scams, or working on unsecured networks at home or in public places. Regular training with frequent reminders will help keep staff vigilant.
- Set up a VPN — teams working from home can put data at risk if they share sensitive files. A Virtual Private Network (VPN) uses encryption to create a direct “tunnel’ between your team and your network.
- Establish strict access control — Use role-based access control (RBAC) to allow access to specific users based on their responsibilities and authority levels. Limiting access can reduce the potential for errors that might put your data at risk.
- Utilize proactive testing — If you are ignorant of your weaknesses, you cannot address them. Testing utilizing a breach simulation program will help you identify where your vulnerabilities and weaknesses lie regarding remote access.
A return to pre-March 2020 conditions is unlikely in the near future. Back-to-office plans that numerous companies had in place for September are being revised daily. And while the full economic consequences of COVID-19 are not clear, it is apparent that startup leaders must proactively address the impact of the specific challenges facing their team. Evaluating your organization and finding effective ways to address potential gaps in your systems, organizational scaffolding, and resources will position you and your team for the “next normal.”