Coronavirus’ Impact On Startups
Lessons from the outbreak, no matter how far you are from its impact.
Random fun fact — I have a Master's degree in International Economic Policy that I don’t ever intend to use.
I realized halfway into my program that I no longer wanted to work in public policy — late aha moments really suck (and are expensive), but anyway, I digress.
When I was in grad school, I learned a lot about the domino effect of international ongoings on your business — good and bad, no matter how small your business is.
Even though the coronavirus seems far away if you’re operating your business out of your home in the middle of the US, if the outbreak sticks around for long enough, it can absolutely trickle down and affect your business.
This week, Mobile World Congress (MWC), the industry’s largest gathering for the smartphone world canceled their event due to coronavirus concerns (about 5% of the attendees are from China).
I don’t know much about the smartphone industry, but my guess is that canceling this event is going to impact a lot of bank accounts for many of the attendees.
If this trade show brought in a significant chunk of a business’ revenue for the year, that business’ executive team is probably having a meltdown right now.
Here are some lessons and reminders the coronavirus outbreak provides for small business owners, no matter how close or far they are from its impact.
Make A Risk Management Plan
I don’t talk about this a lot because I find this level of planning to be reserved for larger companies, but I think it makes sense in the current conversation — make a risk management plan.
A risk management plan thinks through all the worst-case scenarios inside and outside of your company, and what your business will do if those worst-case scenarios ever come to light.
When you’re running a business, you have to keep tabs on everything, including how international outbreaks can potentially affect your business. If its impact would be debilitating enough, creating a risk management plan would be a good play.
If you’re a product business and any part of your product or your suppliers have ties to manufacturing in China, for example, you need to have a plan in place in case your supply costs shoot up.
Think through your market and supply chain like a spiderweb and map out all the indirect links you may have and how it could potentially affect your business. Even if you’re a service business, trust me, the possibility is there.
In the case of the coronavirus, China is a global economic player so it would be no surprise if you find a random link that may affect your business in some way.
Diversify Your Revenue Channels
Your business shouldn’t be built to fall if one trade show or one sales channel were to be canceled tomorrow.
If your business is currently riding on one event, one social media or sales channel that would be debilitating if you were to lose it, you need to diversify your revenue model as soon as possible.
Riding a majority stake of your business’ revenue on one channel is a disaster waiting to happen— all it takes is an event going out of business, a digital platform changing its algorithm or the small chance that there’s a disease outbreak to bring everything down.
Even if you’re a new business that only has the bandwidth to carry a major presence on one sales channel right now, start planting seeds in the background for additional sales channels that you can cultivate to protect yourself.
Do you have a healthy business or does it need a tune-up? Grab my free checklist to find out.