The start-up network is facing the economic disruptions caused by the coronavirus, globally. Several start-ups are already struggling with the dipping funds and disrupted cash reserves. 

A recent study by NASSCOM has stated that almost 75 percent of Indian start-ups won’t be able to outlive the cash reserve that they have. It also stated that the premature and the mid-stage businesses have faced the worst challenge due to the COVID-19 outbreak and the consequential lockdown in India.

To know about the impact in detailed form, please keep reading!

COVID-19 impact

It has been reported by the authorities that the start-ups and small businesses are bearing the burn of the nationwide lockdown. A lot of them are already planning to slow down their business policy or even to lock it down completely. Such is the situation now!

Here is a small survey that has been done by various platforms to study the COVID-19 impact on small businesses and start-ups:

• Around 45 percent of the small businesses and start-ups have run out of their cash reserves and have just enough to last a month.
• Only around 20 percent have assured that they have not run out of cash reserve yet but they have enough to just last 3 to 4 months.
• Only around 5 percent assured having reserves for 5 to 6 months.
• Around 70 percent of small businesses and start-ups have been facing very low demand.
• Most of them are also suffering from supply disorder or upsurge in the cost of their supply.

With the growing number of COVID-19 cases, globally, numerous e-marketers and business analytics have been studying the impact of the COVID-19 impact on finance and business.

Effect on global finance and business

A simple review of the stock market data will show you that the COVID-19 outbreak has made the economy very unstable. However, there are various other factors that you should take a look at.

The early outbreak of COVID-19 in China unsettled supply chains globally. It is said that even if the immediate effects of the outbreak are cushioned, the long term effects will coexist with us in the future. Around 4 million citizens of America faced the backlash of the outbreak. This includes unemployment and layoffs at work.

The laying off is a result of depleting cash reserves of the company which is why they have to fire employees to cut down the expense of reimbursing salaries. A study suggests that around 1.5 to 2 million people may lose their jobs as a result of the COVID-19 outbreak. It also predicted that fresh companies may not take part in the economy or market for some time now, which will lead to a ‘start-up’ depression.

Okay, that’s too much bad news at one go! Let’s take a look at the sunny side now.

Surviving the impact

So to outlive the economic pitfall that resulted from the COVID-19 outbreak, many companies have assured a way out. They have suggested cost-cutting techniques by going minimalistic with the business approach. For example, spending less on marketing or advertising, keeping the hiring process at bay for now, and also by cutting down salaries of employees for a given period. 

However, on the brighter side, many businesses have reported no effect on their cash flow at all. They aspire to continue the way they had been doing before the outbreak

Small businesses and start-ups are likewise trying to manage the cash reserves by going minimal with the workspace and business approach as well.

Positive impact of the pandemic

As it is said, “every cloud has a silver lining”, similarly, the impact of COVID-19 has not been entirely negative. There are certain sectors that have gained from the global pandemic. Let’s check them out:

• Cloud computing – With the onset of the work from home culture, most of the associations have undergone a digital transformation. This has led them to embrace cloud computing and mobility features and tools.
• FinTech/electronic payments – With the social distancing norms at play, hand-to-hand cash transfer has been replaced with a huge scale digital payments and transactions. This has boosted the FinTech industry away.
• Ecommerce – Again, with the social distancing guidelines, people tend to get their required products delivered at home. This is obviously the best way to avoid crowds or gatherings at local shops as well.
• Video content and gaming platforms – With the global lockdown, people, especially students are bored at home. The only major form of entertainment that they can provide to themselves is through videos over the internet or via video games like PUBG and Call of Duty.
• HealthTech and pharmaceutical/medical sector – With the global pandemic at its worst form, health is the prime concern for all. So, every sector that deals with medicines, health, pharmacy, or any kind of medical fabric, is gaining from the pandemic.
• EduTech – With the global shutdown of schools and academic institutions, the classes have been shifted to the online platform. This is in turn, giving a major boost to the EduTech industry for sure.

Overview

Although the impact of COVID-19 seems unreal and depressing in all sorts of ways, do not lose hope. Several popular businesses and so-called brands like WhatsApp, Airbnb, Uber, etc have reinvented themselves during the lockdown. Remember, adversity lets us explore the best in us, as we try not to succeed but to outlive those adversities.

Hopefully, this clears the understanding of the impact of the pandemic on businesses and start-ups on a global level. For more such content, do follow our website, TheCodeWork.

If you want a detailed report. Our team at TheCodeWork has prepared a detailed report on “Starting up during the crisis of COVID-19: Business Report 2020”. Contact us and get it for free.