So here we are: the global economy faces the COVID-19 pandemic. The current situation is transforming both the business world and society. Business models, technology, and markets are changing, as are relations between people, organizations, and nations.
No one is ‘winning’ when it comes to the novel coronavirus. The risk of supply chain disruption is lurking, mass events get canceled and many companies send their employees home. The effects look disastrous.
But can the pandemic also provide new business opportunities? Absolutely. And if you’re a flexible startup, you have every chance of surviving.
Industries that Suffered Most from the Coronavirus
The quarantine showed how vulnerable small and even medium-sized businesses are, and proved how dependent they are on external factors. Even a short while ago, people like Elon Musk were skeptical of the dangers of the virus, thinking that the economy will remain strong, as with avian or swine flu. But it’s not the case this time. Even total isolation can’t prevent the political and economic consequences of a general panic.
The crisis affected offline businesses most, especially those that require human interaction. These include tourism, leisure & entertainment, and HoReCa.
Tourism and Travel
COVID-19 messed with tour operators, airlines, hotels and hostels, to name a few. According to McKinsey, air travel dropped by 50% in 2020. Sure thing, with borders, closed, moving between countries is difficult, and even domestic travel is restricted. The US has banned entry from most European countries, and US citizens must undergo a 14-day quarantine after traveling. To make matters worse, the United States Department of Treasury reported that the effects of coronavirus are worse for airlines than they were after the 9/11 attacks.
Leisure and Entertainment
Theatres, cinemas, and public events like concerts, conferences, forums, and so on have all been canceled or postponed indefinitely due to the coronavirus. The problem with the entertainment sector is similar to the one the travel industry is facing: no tickets are sold, yet expenses for utilities, rent, and salaries remain. Moreover, investments in advertising and marketing didn’t return, which is particularly critical for those who had to cancel their events last-minute.
The coronavirus mercilessly attacked cafes, bars, and restaurants as well as hotels and catering facilities. People stopped traveling and booking hotels, celebrating, and attending events. And while the establishments are closed or forced to work only for delivery, their expenses remain, pushing them toward bankruptcy.
Even food delivery services are struggling but in a different way. It’s hard for them to deal with the increased numbers of orders and the new requirements of contactless delivery. On top of that, the job of a delivery person became much more dangerous.
COVID-19 Crisis as an Opportunity for Business
Amid all that devastation, it seems like there are no companies that may flourish in the midst of the coronavirus pandemic. But the management expert Peter Drucker taught us that change is the most important source of business opportunities.
Focus on Tech
Technological change is the clearest example of transformations that create business opportunities. Like the growth of the internet in the 1990s that opened up many new paths for entrepreneurs.
Constant advances in technology have driven the continuous development of new products, services, and business models. Search engines, online stores, and social media are just a few examples. Indeed, Sergei Bryn, Larry Page, Jeff Bezos, and Mark Zuckerberg are the most prominent examples of those who saw a chance and embraced it.
We can’t all be Zucks, but what we can look at offline business and see if they’re represented online. An offline shoe shop chain might use an eCommerce solution to move their sales online. A popular fitness instructor could make use of a personal mobile app to engage even more audiences. A construction company might attract more customers with the help of a VR or AR app that helps people visualize their new apartments.
Traditional businesses are already implementing Zoom, Slack and cloud services. It’s hard to imagine that they all will return to conventional, and often more expensive, “analog” options when the lockdown ends.
Online Shopping is Booming
The coronavirus pandemic also gave online commerce a considerable push. People worldwide now need to shop online for the goods they used to buy in brick-and-mortar stores. And what’s more important, many of them will probably continue doing the lion’s share of their shopping online even after the lockdown.
According to Statista, by 2021, the global e-commerce market will reach $4.9 trillion per year, which is definitely good news for eCommerce startups.
Mobile is Key
Current trends suggest that more than 51% of internet traffic comes from smartphones. Some startups took advantage of this trend by introducing mobile-based solutions, which provided them with significant growth even in times of the pandemic.
Take, for example, Sentinel Healthcare, a Seattle MedTech startup founded by a doctor to monitor his patients’ conditions remotely. When the crisis struck, they launched their app, Sentinel Fever Tracker, to track COVID-19 symptoms.
Another example is MagicKids, an educational app that combines augmented reality and artificial intelligence to let children interact and learn in the real world. Something to keep kids interested during the lockdown.
And the South Korean mobile household service LaundryGo launched a contactless laundry service you can order from your phone. The provider delivers a “smart” box for laundry under the client’s door, picks it up at night, does the laundry, and delivers it back the following night.
The Time of Innovators is Now
Plato once said necessity is the mother of invention. We could also name COVID-19 the father of innovation in the fields of remote work, medicine, and personal safety.
Some technologies will save lives. Others will make our work from home more efficient, like Hendrix.ai, an AI-based service to transcribe remote calls and meetings, or our leisure more pleasant and healthier, like Cure.Fit, a fitness-tech platform for fitness classes, healthy meals, and basic healthcare. Many users will try these products for the first time during the lockdown and some will realize they remain useful after it’s over.
The novel coronavirus is real, and so is the demand for new solutions to mitigate its consequences. Flexible companies that are ready to introduce rapid changes will win today. Look at giants like Booking.com and Airbnb, who were impacted by the drop in tourism. The magnitude of these companies made them less adaptable. So if your startup can act fast, this could be your chance.
What the world needs right now are entrepreneurs who are bold, creative, willing to put their maximum effort into their business and take risks to find new ways to respond to challenges. Entrepreneurs with these qualities are sure to help control the effects of the pandemic and bring long-term benefits to society.
There even are special organizations that fund such businesses. Plug and Play invest over $250,000 in teams who pass the accelerator and help them with their resources, while Bill and Melinda Gates Foundation allocated $125 million for the research for the solutions designed to identify, assess, develop and scale treatments to the COVID-19 epidemic.
What Should Startups Do Now?
Here’s a piece of unsolicited advice from Vakoms: shift the focus from the pandemic to opportunities, developing and prospecting new horizons for your startup. Stress allows us to focus on the most important things, so startups have to use it wisely. Instead of laying low and waiting in fear, budding entrepreneurs have to work twice as hard.
Here’s what you should do:
- Embrace mobile technologies and the web
- Polish business processes
- Seek new opportunities
- Focus on solving real problems
- Be fast. Very fast
Now is the best time to grow. When the crisis subsides, the most active and flexible startups will be ahead of the competition, and we sure hope that yours will be among them. Stay safe!