Uncertainty in running a startup is a big challenges. While there is no one-size-fits-all approach to managing uncertainty in all businesses, there are general guidelines available that can help you and your team navigate difficult situations more easily.
Design a dynamic business strategy
In an unstable market, startups must prioritize maintaining a steady cash flow. One of the most important reasons startups fail is running out of funds, so it’s important to get your finances under control and monitor key figures like the number of potential customers, revenue, and profit margins of your company. Calculate the rate of interest on your capital and control your bank account balance so that you are prepared in advance for the day when your liquidity reaches zero.
To develop an accurate and powerful plan that has various possible outcomes in an unstable environment, you need to estimate a set of future events based on anticipated challenges through foresight. Then develop strategies for responding to each scenario.
Test your revised business plan in different markets and monitor it continuously to get real feedback. Design the strategy to adapt to internal and external changes while taking into account financial issues, and test it again until you arrive at the most effective plan possible.
Developing a dynamic business strategy prepares you to manage a range of possible scenarios while ensuring you have adequate capital and resources at your disposal.
Have a Lean or Agile approach
Depending on the type of startup you have, applying one of these business approaches can help you make your operations simple and effective and save money.
The agile approach developed in the IT world allows your team to be more adaptable, creative, and flexible in the face of change and uncertainty.
Being agile means engaging in efficient and continuous cycles of thought and action; That is, testing the products during the development process.
For example, to reduce cycle time, consider planning cycles that take place once every three months, during which product sprints are held to determine MVPs and work in multidisciplinary teams.
Lean operations are a manufacturing method that focuses on minimizing waste and providing quality products to the customer. By simplifying and making systems more efficient, reducing unnecessary costs, and reducing redundancies, companies that adopt a lean approach can quickly move from one mission to another to increase efficiency and adapt to the changing needs of customers.
The lean startup method, which was first proposed by an entrepreneur named “Eric Reiss”. Combines the best parts of agile and lean approaches. This concept focuses on the question “Should this product be built?”. This question is raised based on product testing in the market.
To follow the Lean Startup approach, first, engage in a feedback loop of building, evaluating, learning, and feedback by discovering a problem to be solved. Then developing an MVP to test it in the market. The feedback you get from the market also allows you to quickly move on to another idea, niche, or market.
You can use these methods in different guilds, so choose the approach that works best for your startup.
Make clear communication a priority
When the situation is unstable and you are faced with uncertainty, effective communication is vital to the progress of your company. It is important to focus on internal and external communications to ensure that customers, employees, stakeholders, and all groups in the supply chain are aware of the latest information. Keep your team members informed about the status of the company and your plans. Acknowledge that the situation is volatile and faces uncertainty so that all team members can brainstorm solutions.
Also, it’s important to focus on strengthening your existing relationships with customers so that they remain loyal to your brand. This will help you survive a crisis. Listen to the needs of your customers and think of ways in which you can maintain the quality level of the products and services you provide to customers.
Also, you should keep investors and stakeholders informed of your plan of action and be ready to answer their questions. The more clearly you communicate your strategies to your stakeholders, the more confident they will be in your ability to move the company forward.
When faced with unknown situations, clear communication is key to building trust among team members and maintaining good customer relationships.
Focus on what you can control
In unstable situations, it may be difficult to choose what to focus on; So to avoid confusion, accept the things you cannot control and focus on what you can control; such as maintaining cash flow.
Ensure that your current customer base is satisfied with your company’s products and services. Thereby maintaining a steady flow of cash, and try to acquire new customers as soon as things improve. Find ways to reduce variable costs; such as advertising costs. Talk to suppliers and vendors to renegotiate contracts as needed.
To prioritize supporting your current team members and saving money. Pause the hiring process and make a plan to resume hiring after the volatile situation is over.
By focusing on the variables that are under your control, you will be in a better position to manage the unpredictable variables.
Provide a risk management plan
It is always better to be as prepared as possible, even when the markets are volatile; So when things do go bad, having a risk management plan in place can mitigate the consequences.
To create this plan, identify all the possible risks that your business may face and measure how dangerous they are depending on the probability of occurrence and the extent of the impact they will have. Then determine ways to manage these risks through one of the following strategies:
- 1. Generally avoid facing that risk.
- 2. Reduce the risk of that risk by taking actions to minimize possible negative impacts or reduce the likelihood of a negative outcome.
- 3. Accept risk as a natural occurrence in business and proceed with the plan.
- 4. Transfer part of the risk to the insurance company by purchasing general liability insurance or insurance coverage specific to your trade.
Although having a plan for risk management does not make your startup immune from disasters, having a detailed and efficient plan will help maintain the longevity of your business.
Be flexible and change
The good thing about uncertainty in business is that it can open up new opportunities for you. In this situation, while trying to maintain your startup, be aware of growth and marketing opportunities. Embrace the trial-and-error nature of business and try new ideas.
Support your team
In volatile situations, your team members need a leader more than ever. It is the task of the team leader to maintain the balance between transparency and optimism by being realistic and hopeful. So it is better to acknowledge the existence of challenges and define strategies to overcome them.
Keep looking for funding sources
Access to venture capital is essential for startup survival in turbulent conditions. Keep looking for new capital, but keep in mind that funding opportunities may be limited. Strengthen your relationship with stakeholders by holding meetings with them and letting them know your predictions.
In the end, it must be said that uncertainty is a challenge. All startups will face at some point, whether it is due to trade changes, environmental changes, or economic changes. Business risks cannot always be predicted. But business leaders can best prepare themselves to face risks by designing strategies.
Communication, flexibility, and transparency are also key issues for maintaining valuable business relationships in volatile conditions.
When you have the right mindset and strategies, you can turn the challenges of instability. Uncertainty get into opportunities for growth and innovation.