When the covid-19 crisis hit, entrepreneurs in the LBS community were presented with sudden shocks that threatened to sink their ventures. For many, it was the first time they’d seen a crisis and we wondered how we can support them. Together with faculty at LBS, we came up with the Resilient Founders series to draw on the experiences of alumni founders who have seen and survived past crises. We learned how they adapted – and what they wish they had done – to save their business, preserve their own well-being and position themselves to take advantage of post-crisis opportunities. Following our interviews, I have put together a roundup of top ten tips for founders trying to navigate through a crisis. I hope you find them useful. Drop a comment below to share your top tip with the community.
- Crises and failure are the norm in the start-up world. As a founder, you will often hit bumpy roads. Many of these difficult situations are not going to be easy to tackle, but you cannot avoid them in an entrepreneurial journey, and there will always be valuable lessons to learn.
- If you’re going through cash-flow crisis, you must cut hard, cut deep, and cut quickly. Cash is king, now more than ever, so cut out all non-essential costs, quickly. This will help you buy extra time. When planning, be prepared to plan with no more cash for a year, not just for a few months. Also, don’t forget to renegotiate your contracts – every contract can be renegotiated!
- Look after yourself first. Crises take a huge toll on your physical health and psychological wellbeing. Make time in a day for yourself. Don’t stop your fitness regime, perhaps, think about increasing it! Keep healthy, eat well, continue to talk to your network and support system.
- Don’t go underground – be completely honest with your staff and investors about your company’s situation. Be kind and be fair.
- Lessons you learn from this crisis will be your most valuable lessons in your entrepreneurial journey. Remember that you learn a lot more about how to manage a company in difficult times than you do in smooth times. The crisis might also help you see the weakest and the most vulnerable areas of your business.
- Don’t waste a crisis. It’s also much easier to found a business in a recession than it is in a boom, so be ready for a boom! The best companies also never have trouble raising money. It’s the best time right now for good start-ups to raise money, with unprecedented amounts of ‘dry powder’ – cash reserves – in the market, particularly in Europe.
- Really think about your company’s culture, mission and value proposition, then act accordingly. This crisis will help you strengthen your company’s core values. Invest in your people, train your staff so your teams are always prepared for difficult times.
- Don’t underestimate the power of your network. Build and maintain relationships and don’t hesitate to actively reach out to your network. Don’t remain an island.
- Don’t get too dogmatic about your business and your business model. Doing that blinkers your chance to see other potential opportunities. Use your creativity and nimbleness to grab opportunities that may come your way.
- Be ready to adapt when this is all over. Plan to adapt your business model for when we enter the ‘new normal’.
Thanks to the following friends of LBS for sharing their experiences of going through crises. To watch the full video interviews, visit Resilient Founders webpage or check out #LBSResilientFounders on social media.
• Paul Atherton, MBA26 (1989), Serial tech entrepreneur
• Anna Szymanowska, MBA2018, Founder of Fighter Shots
• Savio Kwan, MSc09 (1976), Former COO of Alibaba
• George Sun, MiF2001, Founder and CEO of KK Mandarin
• Neeta Patel, Sloan Fellow 2009, Founding CEO of Centre for Entrepreneurs
• Dan Ziv, MBA2014, CEO of TouchNote
• Saul Klein, Executive Fellow at LBS, Serial investor and Lovefilm co-founder
• Marc Jacobs, Sloan Fellow 2014, CEO of Molecular Plasma Group (MPG)