And just yesterday, the oil crisis literally “added oil” to the already-turbulent stock market to drop a further 7% triggering circuit breakers within an hour of market opening.
Within our own portfolio of 30+ startups, so far the direct impact ranges. A few have experienced business upswings from this outbreak. One that focuses on office cleaning has experienced 20-30% ad-hoc cleaning requests. Another that provides medical devices quickly tweaked their temperature AI framework to develop a new temperature screening device, to better support the increasing market demand for mass scale efficient temperature screening needs. For a few others, they share the early signs of sales slowing down, not just in Singapore but also in their regional offices.
One thing I look out for during tough times is AR value and aging profile of the receivables. Last year, I wrote an article on how founders should pay attention to cash flows. During this period of time, it’s all the more important that they pay attention to this.
Recalling how we went through SARS back in the early days of JobsCentral (SARS was in early 2003), I would say the business community is much better prepared this time. For one, most businesses are still continuing, with many implementing remote working and split shift working system. I also heard of companies “saving” jobs by cutting working days. Comparing to SARS in 2003, most businesses were “lost and frozen” as few knew what to expect from the outbreak. The direct topline drops led to some knee jerk cost reduction measures, including retrenchment exercises (or extended headcount freezes)
Some thoughts on what proactive founders can do during this tough period :
- Being willing to act. The last thing you want is to be paralysed or reactive. Be proactive. Recognise that sometimes curve balls come from the least expected angle, and start being opportunistic in sales, marketing and be nimble in your product roadmaps. Act swiftly and mobilise your teams to act fast to grab these opportunities. However, it’s important to stay “thrifty” too during such product tweaks. Go for quick wins that bring cash and build your brand. I remember during SARS and GFC, we created crisis packages that sold deeply discounted bundles to employers, using the tag line that we help smes with cost. We also tweaked our sales pitches to remind clients that the best companies recruit and build brands during downturns. So even if you are not recruiting, you need to spend a bit to keep branding and maintain mindshare.
- Put in mechanisms in your man-power structure to allow cost and resource flexibility. Eg. instead of retrenching, implement company wide staggered no-pay leave to reduce costs, but ensuring business continuity. In JobsCentral, we followed the National Wage Council’s recommendation to have a 10-15% variable component in our monthly pay. While we never had to use it, this variable could be triggered if we ever needed to bring down cost to save headcounts.
- Manage your AR aggressively and realistically. What’s your >180 days like? What’s the likelihood of collecting them? Work out your repayment plans with your clients.
- Of course watch your spend. Scale back on your spending especially on the “wants”. Be a frugal founder, and cut back on say good-to-have equipment upgrades. Or, is this really a good time to expand into the new market? Review and rethink. Besides, if you are in the midst of fund raising, be realistic that the timeline may be some 30-50% longer than usual.
- Really this may be a good time to rethink internal skillset (re-)training. The good thing now is that there are plenty of really good online learning programs that you could send your staff or even yourself.
As a founder learning to be a great leader, it’s high time we realise that regardless of good times or bad times, we are responsible to bring the business forwards. When you decide to become a founder, your focus was likely to be the great business idea, or that great solution you believe would solve the world’s problem; or simply you believe your product can make you tons of money. However, a business is a lot more than that! It’s actually about how you bring along your team to work with you to deliver that great product you have designed, it’s about how to make sure you manage the cashflow to ensure continuity and it’s about how you grow and become a resilient leader for the people who work along you.