COVID-19: all doom and gloom?
COVID-19: all doom and gloom?
The unprecedented pandemic is still very much upon us. Societies, industries and businesses across the globe are on their knees while the cloud of uncertainty is hovering above us all, threatening to cause yet another terrible storm. Needless to say, the business climate is far from perfect at the moment, as macroeconomic indicators are at the lowest level in a long time and investor confidence is cautious or modest at best. Is this all very bad news? PATRIK GLAS CROMMERT says it’s not …
Disruptive times like this when the business map is being partly redrawn also create opportunities for new entrants into the market. Covid-19 is already responsible for many corporate casualties and more of the same will most certainly follow. In other words, the supply side is decreasing at a rate we have rarely seen in modern times in various sectors of the economy while the demand side is expected to pick up again at a faster pace as the uncertainty gradually eases, creating an opportunity for new challengers.
It is obviously appealing to move quickly to capture the opportunity ahead of you but speed to the market is not the only thing you should consider. Below are some key points that I would encourage you to think through before rushing to grab the perceived treasure at the end of the rainbow. It could be the difference between making it or breaking it.
Possibly the single most important question to ask yourself. Although running your own business may be massively profitable and rewarding, most new ventures are not so successful and most certainly not from inception. Starting a business is a long-term commitment, which in many cases requires a completely new approach to your work-life balance. It is not a nine-to-five type of gig but rather a 24/7/365-engagement – often with low or no salary initially. So, if you are looking for a relaxed work environment without a demanding boss checking in on you every now and then, well, this is not for you.
I am not trying to find reasons for you not to open your own shop. All I am saying is that the reward could far exceed what you realistically could expect to take home from a safe corporate job, but it does not come without a new level of effort. A lot of passion, drive and perseverance is required to win in this game. If you have these qualities, there is no need to hesitate. Go for it!
This is maybe the number-one roadblock for most of us who are considering converting our corporate lifestyle into a more entrepreneurial existence. The path to that dreamland is likely to be a little cloudy and difficult to travel if you don’t have a clear idea of what service or product to take to the market. Although this is true, not all innovations have to be disruptive to be successful. An overwhelming majority of R&D projects are merely continuous improvements on already existing products or services. Don’t overthink it, there is almost never such a thing as a perfect idea or a perfect product. Rather focus on creating customer value. Spend your time and preparation on identifying gaps in the current marketplace and turn your focus to what you could do to satisfy that demand with a new or improved offering.
While you are at it, don’t forget to properly assess the size of the market and the scalability of your product or service. One thing is to find your niche, however: even in the planning phase it’s crucial to determine if it is a sustainable part of the market to enter and stay in for an unknown amount of time in terms of growth opportunities and long-term return on investment and effort.
The million-dollar question: how should this all be achieved? I don’t intend to provide you with a checklist of how to start and operate your company efficiently. What I am doing is to emphasise the importance of a proper business plan. While it may seem like a monstrous, theoretical, never-ending exercise, it is really not. Producing a business plan forces you to follow a set procedure covering various relevant aspects, and if you do it correctly, you will have a thorough understanding of the market, threats and opportunities as well as identify important activities to unlock potential or to mitigate risks. It helps you organise your thoughts and to carefully choose the path most appropriate for you and your company.
A well-designed business plan will also give you a pretty good idea of what the company is expected to generate financially – all based on the assumptions you built into the business case around the market, your share of the same and what your trading margins and operating expenses will be. The financial projection will indicate if this venture is viable from a profit point of view but more importantly, it will clearly show if the intended setup is able to generate enough cash on time to pay suppliers, tax authorities, employees, trading partners and so on.
A business plan – including an attractive financial scenario – is absolutely key for you to access funding when or if needed. Without it, you run the risk of not being able to raise cash on time to grab growth opportunities to take your business further or to guide your company through a period of cash flow challenges. Investors and banking institutions require a solid business case before they open their wallets, so it is definitely worth putting effort into constructing a proper road map for you and your stakeholders.
To conclude, there are going to be some nice start-up opportunities in the post-Covid economic landscape, as demand will recover more quickly than the supply side.
Will my advice guarantee success? Absolutely not! However, following these simple steps will most likely put you in a far better position than if you didn’t consider them. Enjoy your journey and may the force be with you!