Currently, the whole world is still trying to recover from the effects of the pandemic. The crisis caused many businesses to close. Big retailers also filed for bankruptcy even a year after the pandemic started.
Despite the situation, some people may consider setting up a startup before the pandemic ends. A startup is a new company established by one or more people who want to bring a new product or service to the market. The product or service is typically unique and has the potential to change the market in the future.
While launching a startup can be complicated, it is not impossible even in a health crisis. There are a few startups that leveraged the pandemic to build a market for their products. If the product or service can meet people’s needs during the pandemic, there’s a good chance it will succeed and even thrive during the crisis.
But before setting up the startup, it’s best to take into account a couple of things.
Relevance of the Product or Service
As indicated earlier, a couple of startups leveraged the pandemic to market their products. While some of them incubated before the pandemic started, others got their inspiration from the crisis. For instance, Copper Clean is a company that makes copper-alloy foils featuring an adhesive backing. The product can protect surfaces from pathogens, such as the coronavirus. Another startup, Hiya Health, manufactures vitamins for children that are not made of sugar.
These startups’ products are relevant to the current situation, which allowed them to successfully launch despite being in the middle of a pandemic. They may even continue to thrive after the pandemic ends due to their significance in ensuring people remain healthy.
Work with Investors
Working with venture capitalists and angel investors is a good idea since it allows entrepreneurs to know what they are looking for in a startup. A venture capitalist and an angel investor provide the initial capital for a startup to launch its product. In exchange, they receive a share of the company that they hope will return on their investment.
The difference between the two is that the angel investor is a single individual, while a venture capitalist can be an individual or a firm. Additionally, angel investors can invest up to around $100,000, while a venture capitalist can give an average of $7 million.
Talking with these investors allows entrepreneurs to know what they need to show to make them confident to invest in the startup. They may want to see the revenue of the products or services and if it is recurring revenue. These investors may also want to see the target market and potential growth rate of the market. So, it is important to build a relationship with them to know what they are looking for since investors have different points of view regarding making money.
Prepare a Long-Term Strategy
A long-term strategy is also important since it allows the entrepreneur to project the startup’s expenses. It is also useful if an investor wants to see projections from the startup. The strategy should look into the next two years of the startup. Aside from the potential revenue, the strategy should also consider the growth of the startup, including the hiring of necessary personnel to help n its growth.
Since it’s challenging to hire the right people for the right positions, the entrepreneur can conduct online employment tests to screen potential employees. By hiring a company to conduct the screening, the entrepreneur can focus on the more important parts of the business, which is product development. The strategy can also include the marketing aspect of the startup, including how it can generate revenue and metrics showing if it’s succeeding or not. The entrepreneur should cover all the bases so when it presents the strategy to an investor, all their questions will be answered.
Review the Startup’s Financing
When the startup grows, it’s a good idea for the entrepreneur to review the company’s finances. It can explore other sources of funds to allow it to expand. At the start, it may have relied more on equity or funding from angel investors and venture capitalists.
But once the company stabilizes, the entrepreneur can consider taking out a loan to fund its expansion. Debt financing allows entrepreneurs to retain control of the company. At this point, they already know if they have the revenue to repay the loan gradually.
Launching a startup is challenging, especially during a pandemic. But it is not impossible, especially if the product or service it offers is relevant and marketable even during a health crisis.