Whether or not there is funding support, careful financial management is key for start-ups to survive these challenging times. “These days, financial management can no longer be taken lightly,” says Mingles Tsoi, CXO of ParticleX, an angel investor and accelerator focusing on tech start-ups. With predetermined development goals and detailed balance sheets, he says that start-ups can easily ascertain their financial sustainability. The information also helps start-ups make forecasts and decisions and gives investors a factual basis for their situations.
If the financial situation looks dire, layoffs are probably inevitable, even though they may lower team morale and endanger the company’s ability to recover. “It’s all about survival now: keep your core business running at a minimal operational cost until the pandemic is over and the economy recovers, then you can raise more funds,” says Tsoi. “Layoffs are never easy, but if they are handled well, your employees will understand. If possible, rehire them when you are on your feet again.”
Layoffs aside, Jason Chiu, chairman of the Hong Kong Startup Council, suggests that start-ups shift their fixed costs to variable costs such as:
- Try to have ‘earned’ media exposure instead of ‘paid’ exposure, or form a marketing partnership with other companies to reduce related costs
- Share the same teams of people with other start-ups to handle your finances, HR and administrative work
- Negotiate with your landlord for a lower rent.
- Rent a smaller office. Move out of your office and move into a co-working space.
“If you belong to an accelerator, leverage its resources and services,” he says. “You really need to think out of the box and consider every possible option to keep your business running.”
Check out other key pieces of advice here:
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