For most economies, start-ups play a crucial role in job creation. Such companies bring forth new ideas and innovations, which give rise to groundbreaking concepts. Moreover, new jobs must be created for emerging economies to absorb the burgeoning population of skilled laborers.
To do so, the growth of start-ups should be encouraged. However, the present COVID 19 crisis brings forth challenges to start-ups’ growth, especially to the emerging economies. Nevertheless, some entrepreneurs perceive these challenges as opportunities to innovate and create new businesses.
Some of the challenges and opportunities that start-ups are facing during the COVID 19 crisis are as follows:
Challenges of Startups
The COVID 19 crisis has made it difficult for start-ups to acquire funds. For companies looking to invest in start-ups, it has become challenging to make investments. Financing companies have become wary about investing in start-ups because of the overall economic downturn.
Financial institutions and banks have become strict when it comes to giving loans. The primary reason for this is that it remains unpredictable whether the loans can be realized after the crisis. This economic downturn seems to be trickling down to the start-ups, and the companies are finding it challenging to acquire the necessary funding.
Without funding continuing to work in a crisis becomes difficult for start-ups. However, once the crisis is over and as the economy recovers, things will start becoming better for start-ups for emerging economies.
2.Setbacks on the Growth Front
The primary setback that start-ups face with the COVID 19 crisis is that the opportunity to grow has been reduced. The primary reason for this is the imposition of travel restrictions. The acquisition of talent from other parts of the country has also reduced because of travel restrictions.
Similarly, managers cannot travel overseas to meet clients and acquire more business opportunities. The creation of new resources, reaching out to more people, and proving to clients and investors, why investing in their start-ups will prove worthwhile have become a significant challenge.
Entrepreneurs have to depend entirely on digital media to convince clients to invest in their companies. This often prevents companies from growing and acquiring new business opportunities. Travel impositions and inability to meet with clients face-to-face have become significant problems, which have led to setbacks on the growth front for most start-ups.
3. Reduction of Human Resources
With the COVID 19 crisis, strict norms for social distancing have to be implemented. Additionally, it has become essential to allow most employees to work from home. Both of these together have made it difficult for most owners of start-ups to manage their businesses. Say, for instance, your start-up belongs to the retail sector, then maintaining social distancing norms and, at the same time serving customers can prove to be challenging.
Similarly, work from home is not a possible solution for employees working in the retail sector. Hence, start-up owners have to come up with innovative solutions so that their employees’ health is not compromised, and at the same time, the company, too, survives the crisis.
Opportunities for Startups
1.New Business Options
Although the COVID 19 crisis has brought up several challenges for start-ups, many entrepreneurs perceive it as new business opportunities. Most start-ups are diversifying into eCommerce and retaining customers by providing doorstep service.
For example, if your start-up belongs to the retail sector or owns a start-up that provides home service, you can set up a website, and your customers can reach out to you through the website. Similarly, you can even launch a mobile application and let your customer base know that your services are available even during the COVID 19 crisis.
Many start-ups have diversified into the eCommerce industry and, by doing so, have not only retained their loyal customer bases but also have gone on to expand it. Thus, for such entrepreneurs, the COVID 19 crisis has brought forth new business opportunities.
The COVID 19 crisis has forced most consumers to rely on the Internet to meet their daily requirements. Hence, from purchasing their daily essentials to clothes, medicines, and even electronic gadgets, they become heavily dependent on the Internet.
Many entrepreneurs perceive this as an opportunity to venture into the eCommerce industry. Start-ups that provide Software as a Service (SaaS) perceive this as an option to help such companies thrive in a highly competitive eCommerce industrial sector. If you see the eCommerce industry, it was a thriving industry before the COVID 19 and had significant players.
Now to compete with them, start-ups need to provide customers something new and unique. So most entrepreneurs perceive this as a chance to innovate and provide customers with something new. Similarly, start-ups providing SaaS help these companies come up with unique Software related solutions to simplify the process. This way, both customers, companies, and clients are happy with the working of the industry.
With the COVID 19 crisis, entrepreneurs realize that there are numerous ways of reducing operational expenses. For example, they realize that working from home does not necessarily reduce the efficiency level of employees. In some cases, it can even help employees become more proficient in their work.
Moreover, money can be saved in traveling and maintaining proper offices. When funding is low, then maintaining extensive offices can prove to be cumbersome. Hence, work from home can come across as an opportunity to reduce operational expenses and increase profitability.
Some start-ups are even considering that after the COVID 19 crisis is over, they will not insist on employees to work from the office if they find that their productivity levels remain unaffected while working from home.
Thus, the COVID 19 crisis can be perceived as a time of both challenges and entrepreneurs’ opportunities. When you look at the challenge offered by the COVID 19 crisis, you will have to look for an innovative solution that will help you overcome the crisis. The only factor that you must consider is that even after the crisis is over, the solution you come up with remains effective.
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