Keeping a business alive during COVID-19 has been a massive struggle for people all over the world. A Fortune article on business closures indicated, in fact, that in the U.S., some 100,000 companies that had shut down temporarily as a result of the virus were now closed permanently. This is a major economic problem affecting countless people and deserves a great deal of attention. But as we look at the COVID crisis more broadly, there’s another similar matter that should be discussed: How will new businesses be able to establish themselves successfully when we finally begin to move past the coronavirus?
It’s a big, complicated question that different startup founders will have to answer for themselves, and which government support will need to play a large role in. But there are some general considerations startup founders will need to keep in mind in order to set themselves up for potential success after COVID-19.
The Importance of Emergency Funds
The very concept of emergency funds has never been in the news more than it is right now. But it’s no wonder why. Paga’s blog post on emergency funds put it best, stating that if there’s anything COVID-19 has made us realize, it’s the importance of having these financial safeguards on hand. This isn’t just true for individuals, though. Businesses, too, are realizing the potential benefits of having some emergency funds on hand; for many, an extra week or two of the financial runway may have been the difference between survival or shutdown. This is absolutely something for hopeful startup founders in a post-COVID world to keep in mind. Building up an emergency fund from the beginning can provide vital security against future crises.
The Necessity of Liability Protection
The struggles of COVID-19 have also made it easy to see just how quickly things can go south for a small business. And given this new clarity, startup founders would do well to recognize the importance of protecting themselves from liability for business assets. We expect this may lead to two things: more people purchasing liability insurance and more people forming LLCs with their new startups. The insurance option more or less speaks for itself; a founder can pay in advance to cover business liability costs down the road. The LLC idea, meanwhile, while not always a fully necessary step in the early days of a new company, can help with specific regard to liability. Per ZenBusiness’s explanation of LLC benefits, a company of this sort makes for a situation in which “the owners are not personally responsible for the company’s debt or liabilities.” In other words, even if the worst should befall the company itself, the founder’s personal assets can be protected.
The Need for Flexibility
Perhaps the single most important consideration for new startups following COVID will be the need to embrace working flexibility. For better or worse, the worldwide workforce has grown used to contributing remotely, and many will be apprehensive about returning to more ordinary conditions. Startup founders will need to be sensitive to these changes, as well as to potential employees’ desire to stay safe from COVID or future health concerns. While we don’t foresee a world in which all or even most new businesses necessarily rely entirely on remote work, flexibility will be key.
The One-of-a-Kind Hiring Opportunity
With so much focus on struggling businesses and lost jobs, there has been surprisingly little talk of the fact that there is also now an enormous population of individuals who are highly capable but out of work. As Harvard Business Review’s look at the pandemic economy put it, this brings about an “unprecedented” opportunity for business owners to hire great talent. Naturally, startup founders need to have the funding in place to appropriately value and compensate these talented hires. But people in the position to start and staff new companies should keep in mind that they may never see a better pool of available talent than they will in the next year.
The Challenges of the New Supply Chain
This April article titled ‘Global Supply Chains Buckle Under the Pressure of Hoarding’ spoke to some of the early issues COVID-19 brought about with regard to supply chains for everyday items. Grocery stores, for instance, were short on supply for ordinary items simply because people preparing for lockdowns were over-stocking. But as the year has gone on, it’s become clear that supply chains are hurting more broadly as well, and it may be a while before we can rely on them the way we used to. Supplies are short, demand is fluctuating wildly, and shipping has slowed, and any of these issues can affect new businesses. Startup founders should keep this in mind and plan accordingly.
The truth is that there are interesting opportunities to be had for prospective startup founders. But the world has changed as well, and as a result, these are now necessary considerations for people launching new companies.