In This Uncertain Environment, It Pays To Behave Like A Chameleon

What a difference a week makes in today’s uncertain environment. There had been an explosion in the number of covid-19 infections worldwide, especially in Italy, South Korea and Iran. The stock market basically plunged even after the Federal Reserve in the United States cut interest rate by half a percent. Or some say that the market tanked because of the unexpected rate cut which reflected panic. People around the world behaved alike in raiding the supermarkets of necessities like canned food, water and toilet paper.

It is true that no one knows how long this situation would last. Some expect the virus to wind down as summer approaches. Others thought that it could last for many months. Still there are some who felt that the covid-19 would slow down a bit before coming back again the next year. Whatever the outcome, your guess is as good as mine.

For many entrepreneurs, this period has been an unnerving one. Some who ventured like those brave souls buying stocks on the dips may have been burnt. However this blog is focused on helping start ups rather than speculators trying to make a buck in the stock market.

One thing is clear. Businesses and companies have cut spending as revenue declined or in anticipation of the negative effects of the coronavirus. Many have banned air travel, not only to Italy, South Korea or Iran but also destinations nearby. Supply chains had been disrupted since many companies source from China. Beside the travel trade, restaurants and retailers too had been hard hit. Such effects have cascaded to other sectors as well. As a result, those still employed face a cut in overtime work or even basic wages. What this means is that companies and individuals are likely going to tighten their belts considerably over the next few months.

For startups or those already in business, this period would be particularly challenging. However there are certain measures entrepreneurs could take to be ahead of the problem. In the light of tightening wallets, entrepreneurs may have to behave like chameleons, changing according to the environment. With less buying power, startups should focus on lower priced economy items which appeal to the current consumer. Thus instead of bringing in premium products selling at higher prices, they should do the reverse. They should therefore source particularly for budget and lower end items. For existing higher priced items still in stock, they could consider marking down prices to entice those who could still afford them.

Secondly entrepreneurs should review the products and services that they offer in view of this crisis. Individuals are also more likely to stay at home and shop online than go to the mall for fear of contacting the coronoavirus. In such a case, products and services which cater to people outdoors and outside their homes are likely to drop in demand. Therefore entrepreneurs should take a hard look at their current situation. They could scale down products and services where demand would be expected to decline. At the same time, they could attempt to look for items that those at home would find them appealing.

The important thing for startups to do now is to hang on till the crisis is over. This may take a while and during this period, entrepreneurs would need to be like the chameleon and change accordingly.