New business applications are the highest since 2008, reports the Wall Street Journal. Is it crazy to start a business during the Covid-19 pandemic? I say it’s brilliant, and at least 1.1 million Americans who recently applied for EINs agree with me. In my time as a Fractional CFO, I’ve seen the good, the bad, and the ugly of entrepreneurship. Although an economic downturn brings great uncertainty, it also brings the opportunity of a rapidly changing environment. Uber, Airbnb, Microsoft, Slack, FedEx, Disney, and Venmo were all started during recessions. The challenging environment breeds innovative opportunity.
How do you capitalize on the opportunity while managing the risk and uncertainty of Covid?
Here is what I have seen successful entrepreneurs do:
Tell everyone your idea.
Who should you seek advice from? Business mentors? Consultants? Friends and family? I say tell everyone about your business. Tell your Uber driver, tell your AirBnb host, tell your barber, tell your colleagues, even tell your boss! Here’s why: doors will open for you when people know your dream. You will find valuable connections in the most surprising places – for example, my first referral came from a co-worker I had not seen in 5 years. The most important factor in a startup’s success is its resource network, so start building yours.
Accept criticism with gratitude.
Everyone has an opinion to share, and there’s values in all of them. That friend who pokes fun at your WordPress website might have a good point. Your partner may tell you to spend more time with your family, and that is important. By accepting the criticism with gratitude, you will learn more about your consumers and build stronger relationships.
Expressing your gratitude can be a challenging skill. Remember a time you gave feedback to a friend and they got angry or defensive? How likely are you to give them feedback again? Successful business owners thank others for feedback with sincerity and consider their ideas. That is the first step toward building an innovative team.
Accepting criticism does not mean you will act on all of it. Consider your options, pick your strategy and keep pushing forward. When I started CFOshare, my UX friend told me the website had too many words, my SEO consultant told me we needed more words, and my accountability partner told me the website was not even important for a service businesses. That kind of contradiction could paralyze someone into indecision.
Keep in mind old-fashioned business advice does not necessarily apply during a pandemic. “The three most important things in business are: location, location, location.” That was pre-internet advice, and those old-timers are still out there giving out tips – watch out!
Think for yourself, sift through the tips, and do not be the deer in the headlights – pick your strategy and keep moving forward.
Plan and pivot.
Make great plans and be excited to abandon them. The purpose of planning is not to get things 100% correct – the purpose of planning is to identify when conditions change so you can change course appropriately. Consider a friend of mine, Ted, who started a IoT product company. He started marketing direct to consumers through Facebook and Instagram, but he was not generating sales. Rather than pouring more money into a failing strategy, he pivoted and started prospecting business clients to buy the sensor components of his IoT device.
I helped Ted build his original business plan. When considering changing his selling strategy, Ted asked for my help to determine if he could afford hiring sales staff and the long close cycles business customers required. We updated his business pro forma found the selling pivot sustainable. Ted proceeded with the pivot, found success, and has scaled his business to $10M in sales. This is the power of planning – it gave Ted the confidence to change his strategy.
Ask for help.
Nobody succeeds in business alone. Start building your network of support – it may be a co-founder, a mentor, a contractor, an employee, or an investor. More likely you will have all of the above. This will be a key resource for you in the best and worst of times.
Enjoy the adventure.
What makes it an adventure? Almost nothing goes as you’d expect, and you come out stronger on the other side. Keep that in mind as you lie awake at night worrying about sales, or you are struggling to close an equity round. You are an entrepreneur, and you are special because you took the chance.