Financing Your Business During Covid-19

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The Covid-19 Pandemic has hit the global economy with a vast force. Even though lockdown restrictions have eased in several countries, the financial markets will take a long time to recover from the ongoing crisis. According to the International Monetary Fund, this has been the worst downfall since the great depression, projecting a massive loss of $9 trillion in the global domestic product over the next two years.

It is a challenging time for businesses, especially for startups operating with razor-thin margins. Apart from the weak demands and revenue losses, the rapidly changing consumption patterns also constitute some of the key reasons why the startup ecosystem is going through the challenge of raising capital. There has also been a significant decline in funding activities since the investors are becoming more cautious about the pandemic’s economic implications.

To take your business ahead in such conditions, it is essential to develop a plan for financing your business.  We present the 3 R plan, which can help you devise a plan to finance your business during this time.

Research

Evidently, the funding space of startups is not as active as last years. However, Venture Capital firms are still seeking investment opportunities to increase their wealth. For financing the business during such a crisis, companies must search for potential investors. 

Key points to consider 

  • An investor should be likely to invest in the sector of the startup
  • Check their recent investments to know about their funding rounds.
  • Investment in seed startups or big stage startups
  • Average Deal Size
  • Amount of involvement in investee companies.
  • Shortlist the names of several investors who fit your criteria.

This research helps the firms get a clear picture to zero down on the prospective investor best suited for financing your business venture. Once you know the industry’s pros and cons, you might have the edge over your competitors.

Reassess

Once the research is done, you need to reassess your business’ viability in the current situation, whether it is scalable, profitable, and offers equitable and sustainable growth. If these criteria are not fulfilled, you need to make changes to ensure an actual demand for your company’s products and services. 

This pandemic has bought a tectonic shift in the customers’ mindset, which has a significant impact on their buying and spending behavior. Customers are known to be more price-sensitive and are looking for products and services that can offer the best value. Taking these external factors in mind, you need to focus your business on relevant products and services. 

Restructure

The last step is restructuring your messages and proposals to the investors. Investors tend to back up the companies with a strong USP. Transparency is another crucial aspect that can draw investors to your venture.

Ensure that your pitch reflects the same. Keep bringing innovations or innovative solutions into the market. This will not only add pace to your business but also attract customers. You also need to set realistic and achievable valuations, keeping in mind the current situation to minimize the risk factor. 

Apart from the Research, Reassess, and Restructure program, you can also benefit from the Government policies for startups.

It is expected that with time, the businesses will resume entirely. Although the companies might not run, as usual, you can make substantial efforts to move on. These are some of the best methods you can opt for funding your business. Taking help from investors and the Government’s remarkable support to keep your business running plays a vital role in financing your business. 

2 thoughts on “Financing Your Business During Covid-19”

  1. I want to thank you for writing such an amazing article on investment.
    I would like to read more articles.
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