Recently, the Massachusetts Institute of Technology created an artificial intelligence model that allows you to determine if the person has COVID-19. It turns out that the cough of a healthy person and the cough of a patient with coronavirus, even asymptomatic, is very different. It is impossible to recognize this difference by ear. The program asks to cough into the microphone and instantly identifies the infected person.
It was no coincidence that I brought this story to the table. Now, many are divided into two camps. Some say that the crisis is good. It will accelerate the implementation of experimental projects like the aforementioned AI-model, will bring new players to the market, and will strengthen the positions of the most powerful longtimers, especially the technological ones. Others argue that the crisis is terrible. People die, there is no work, and we will suffer the consequences for a very long time.
But entrepreneurs have no time to choose a camp. No one knows when the crisis will end. The average probable number is one and a half years. The key question is ‘What will you be doing all this time?’
Here's what you need to do to benefit your business.
1. Identify weak spots
Anything grows in a good climate and great conditions. But crises always hit the weak spots. It is painful and troublesome. Some chronic diseases cannot be noticed until they get worse. But that's when you can start treating them. To “cure” a business means to modify it, to make it more sustainable.
Be sure to check what processes are raging in your company when the currency is volatile when there is no opportunity to use loans and refinancing. How do the decisions of the Cabinet of Ministers regarding quarantine levels affect your client base? How long will the reserve funds last and do you have any at all?
Only the crisis allows us to outline weak spots to which we usually turned a blind eye. Unfortunately or fortunately, there is no single clear instruction on how to eliminate weaknesses, you have to be creative on this.
2. Use available resources
The crisis frees up a place in the market, someone's light peacetime weaknesses become fatal in crisis. This process is independent of geography. Take a look at the situation in the USA. Firms in various sectors are now closing massively there, retail, transport, hospitality, energy, healthcare. According to analytics forecasts made by the analysts of Linklaters, an international law firm, the bankruptcy boom will
After the unviable projects collapse, resources for the development of the new, more effective ones appear. Those companies which keep operating in the market get the opportunity to attract the best personnel and raise the level of service.
For example, there was a huge overestimation in the IT-specialist market recently. If you were looking for a frontend talent for a new product, they were either already occupied or were worth crazy money. And then came the crisis. Getting a front-end developer on board has become easier, which means young and hungry startups have more opportunities to accelerate their products and services.
3. Adapt the financial model
You can and should be prepared for shocks, money-wise. The current downturn was compounded by the pandemic but was no news to the world. No one had the idea of what would be the cause of the recession, but most economists
During the decline in financial markets, everything is getting cheaper, looking for new investors becomes unprofitable. It is necessary to change plans and financial models. Based on this, our holding, for example, did not count on investments in 2020-2021, but we filled up reserve funds beforehand and focused on finding additional funding and resources.
When the crisis struck, some of our areas went down. In particular, Enestech’s profit (the company that develops SaaS solutions for the computer center work automation) directly depends on small and medium-sized businesses, on whether these businesses operate. During the full lockdown, those centers closed and revenue fell. But we were creating our reserve funds keeping the possibility of such a situation in our heads. And besides other areas of the holding went up, for example, esports.
Photo: WePlay Esports
4. Change the development focus
During a crisis life is like climbing an escalator that goes down, you need to walk very quickly to stand still at least. You should not stop and freeze. But you should change your focus.
Look at your company’s main indicators and determine which of them are beyond your reach right now, and which can be improved. If your customer’s ability to pay is going down, it may be worth focusing not on profit margins, but on loyalty and new customer acquisition. Yes, many will not bring you money now, but they can once things get better.
In the case of Enestech and the falling revenue, we understood that while the client’s businesses were closed, it would not be possible to increase profits. But you can improve the product itself and increase the customer base.
Personnel became more available, and we decided to use our reserves to increase the development department, thanks to which we expanded the functionality of our SaaS solution. And hundreds of new customers were attracted by the freeware-model of the service, we offered new customers to use the basic functionality for free. The company's revenues are fees for additional services and light ads that users watch. Revenues are already recovering, and we expect a boost right after the crisis.
5. Enter new markets
This is not an obvious step, but a justified one. Imagine that you sell products or provide services in several countries at once. This means that at any time you can concentrate on another market. Is there a crisis only in one country or several? In one country it might be less dramatic than in another, and there might be no crisis in the third one.
Countries with low solvency of the population can be studied as targets. Look, for example, at the Statista
Now we are actively exploring the Brazilian market, not only because it makes it possible to work with a gigantic audience of 210 million people. Brazil is a poor country, but, according to experts' forecasts, Latin America will very soon become a driver of the world economy, because they have room to grow and the conditions necessary for growth have been created in these countries. And this is just one example of where you can expand.
To sum up, look for new opportunities
There are no universal solutions to fight the crisis. But there is common sense and bumps we’ve had doing business in Ukraine for years. Revolutions, war, and world disruptions have repeatedly taught us not to put our eggs in one basket. After 2014, my partner and I finally decided to diversify our businesses so as not to depend on one country, one currency, consumers of one language group. Yes, we’ve started working many times more, but the incoming crisis conditions became better for us.
When a person creates a business, he/she takes risks and agrees that there are situations that can ruin this business. And he/she understands that there are methods by which the impact of such situations can be reduced. We must continuously seek new opportunities in both stability and turmoil. But now it should be at a tenfold speed.
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