While 2020 was difficult year for many, there are big business lessons that entrepreneurs can learn from it, writes Dominique Collett, head of AlphaCode and senior investment executive at Rand Merchant Investments.
Here is everything business owners should know about solving for customers’ pain points, incremental innovation and the new definition of company culture, and more.
- Always maintain a good cash buffer in the business (at least 3 months) to protect yourself in the event of any downturn/ crisis.
2. Your operations need to be agile and nimble so that they can quickly be increased or decreased in times of stress. The financial services organisations that weathered this storm well were those that could quickly adapt their service and operating model to a digital world.
3. Solve real customer problems to build a robust business. If your service/product relies on your customers’ discretionary spend, it’s okay, but be aware that you are more susceptible to shocks that impact your customers negatively. (Quibi is an example of a business that hadn’t catered to a strong pain point.)
4. Build systems and processes in your business as early as possible (including disaster management). The approach of most startups tends to be solving problems as they arise, which keeps them nimble and adaptable, but if you’re building for the long run, you need systems and processes to enable your team to remain focused despite the noise.
5. A noteworthy counterbalance: remain focused on solving the problem and do not get trapped by your processes. With global lockdowns, many service/product providers needed to reimagine distribution methods on account of social distancing.
6. Luck is a significant variable for startup success but be ready for your lucky event. Zoom is an example – they had built their systems when the pandemic hit.
7. If you’re solving a customer pain point better than your competitors, you may have more leeway to make mistakes and still win them back e.g. Zoom. If your product or service is undifferentiated from the rest of the market, mistakes are more costly.
8. Talent is more globally accessible. Businesses continue to operate with remote working staff is a clear indication that geography is largely an artificial limit for sourcing the right talent.
9. Create room for incremental innovation. Many businesses had thought about how they were going to digitise their operations or improve customer accessibility and engagement through technology prior to the pandemic. However, these initiatives usually took a back seat to daily demands. Often, big tech or innovations take a long time and by the time they are ready, they are removed from the present needs of the customer. Rather set mini goals to improve customer experience and create efficiencies over short periods. Consistently executing on micro goals, prevents major costly overhauls later.
10. Use times of crisis for reflection and reinvention. Many startups had to re-evaluate whether the business they were building was still needed. Those that reflected at the onset of the pandemic, were able to consider new ways of interacting with their customers, create new or improve existing products, find new market opportunities, improve company culture etc. Reflection followed by swift action allowed many startups to reinvent themselves and better navigate the uncertain environment brought on by the pandemic.
11. Company culture is not what resides at a company’s office. Culture is the common purpose that ties a diverse group together and drives them to work towards a common goal. The pandemic disrupted employees having to be confined within four office walls. Leaders have had to innovate and use tools to foster remote collaboration and measure productivity. Companies with a clear “why” and whose employees have bought into the “why” have preserved their culture and adapted well to remote working.
Follow SME South Africa for Dominique Collett’s trend forecast for the fintech and startup space.