Entrepreneurship is all about adapting to the inevitable changes. This does not mean that entrepreneurs are immune to global pandemics like COVID-19.
The COVID-19 pandemic has been reported in more than 175 countries and territories around the world.
As of April 7, the disease caused by the novel coronavirus (SARS-CoV2) had affected 1,378,937 people, leading to more than 78,000 deaths. It has shut down business activities around the world, bringing some sectors to the verge of collapse.
While governments and big companies are feeling the heat of COVID-19, entrepreneurs are definitely the biggest hit. The disease and the way the world is responding to it has left entrepreneurship in crisis. Small and medium businesses are suffering the reality, and there is a good chance that things will change for good even after the pandemic. Here are four ways the COVID-19 has left entrepreneurship in crisis:
Emphasis Is Now On Survival
Many entrepreneurs had serious expansion plans for 2020. Many had taken the necessary actions, signed the necessary contracts, and started adapting the strategies to become bigger. The reality of COVID-19 has taken everyone back to the drawing board. The primary objective of any entrepreneurial endeavor at the moment is to survive. This is a no brainer as there is no upside for any business that doesn't survive the crisis.
Revenue Has Been Hit, and Will Take Time to Get Back To Normal
A few businesses who are supplying products and services that are mission-critical or enablers of remote working and lockdown living are still doing well in terms of revenue. For the majority of other businesses, however, revenues have been hit. Contracts with cancellation clauses are getting terminated due to the uncertainties about the pandemic.
Entrepreneurs are no longer able to fully rely on their supply chains as it is becoming increasingly obvious that more businesses may shut down soon. Factories are closed and businesses with physical outlets have been forced to close as society is pushed into lockdown, cutting out most revenue streams. The biggest question is when will this end. There is a good chance that revenue will not get back to normal for most businesses in the next 12 months.
Raising Money Will Be Tougher Going Forward
Funding will stall even after we see an end to the menace of the coronavirus. Limited Partners who provide the funding that goes into the VC pot have been hit, either through their own businesses or through stock market crashes, and so the pipeline of funding will be increasingly reduced.
Some investors will remain active, but we will likely witness smaller rounds of investments at lower valuations. Even for existing portfolio companies, the disruption of most business activities, and the sudden downturn in the market will cause a severe stall in funding.
Emerging entrepreneurs will have to think outside the box to get funding. That being said, many governments around the world are offering grants and funding incentives to entrepreneurs who can provide new solutions to a COVID-19 and beyond new world order.
Downsizing Will Take Center Stage
As bad as this can be for some people, downsizing will be the way out for most entrepreneurs. This will be part of the survival strategies many businesses will adapt. Already, many employees have lost their jobs in some sectors.
There is no way for things to get back to normal immediately afterward. Except for the very big companies, most businesses will have to do with fewer employers until they have recovered from the shock of lost revenues. Fortunately, many governments around the world are offering support schemes for employees who may otherwise have been made redundant, with the UK government’s furlough scheme a prime example.
Entrepreneurship is all about adapting to the inevitable changes. This does not mean that entrepreneurs are immune to global pandemics like COVID-19. The novel virus and the disease it causes has left entrepreneurship in crisis in many ways, and the points above are the realities at the moment. There are nonetheless opportunities for new entrepreneurs. The global recession in 2008 birthed the likes of Uber, Airbnb, WhatsApp, Slack and Pinterest.
Now is the time to seize the moment.