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Startup Case Study: How One Business is Dealing with COVID-19

COVID-19 continues to impact of businesses of all sizes. Here's a startup case study which lays out how one of Burkland's clients is responding.

A startup case study on company adaptability, crisis leadership and business recalibration

Executives around the world are racing to implement contingency plans to remain operational during the coronavirus pandemic. In some cases, these plans include the abandonment of revenue estimates, hiring plans and M&A, plus recalculation of expense budgets to reflect steep sales declines, remote workforces, travel bans, funding constraints and canceled conferences.

None of it was on the horizon four weeks ago…as black swans go, COVID-19 is a biggie.

COVID-19 Startup Case Study

One Burkland CFO services client has moved quickly and aggressively to not only understand the virus’s impact on their business, but also make the difficult but necessary decisions needed.

This particular company is tied closely to the corporate events sector, which has been decimated by travel restrictions and large-gathering bans by local and state authorities.

How they have reacted over the past three weeks provides a startup case study on company adaptability, crisis leadership and business recalibration in the face of an unpredictable event that threatens the entire enterprise.

Five factors have been critical in the company’s response so far…


1. Decisiveness

From the moment the first major U.S. corporation canceled all non-essential travel, the leadership of the company understood the impact COVID-19 could have on the company. Almost overnight, the business pivoted to a line-by-line analysis of each customer and the expected revenue associated with each. Accounts receivable balances were scrutinized and cash conservation emphasized. The sales team shifted from a growth mission to a preservation one, and management started looking at what a dramatic decline in activity would mean for headcount. Wait-and-see did not enter the lexicon; leadership rapidly understood business, as usual, was out the window and started acting accordingly.

2. Financial information/modeling

Prior to the arrival of COVID19, the company had developed a complex model of the business reflecting not only revenue and expenses but also expected cash patterns over time. The model took a long time to perfect, and has proven crucial. Because we already had it in hand, only a few hours were needed to recast the model into a simulator that could game out the impacts of a number of factors developing simultaneously. For instance, we were able to visualize different degrees of revenue drops and model them both with and without a hiring freeze and/or furloughs to existing staff. This allowed management to rapidly understand various scenarios and make data-informed decisions about what to do next. Had it been necessary to build the model from scratch, it would have taken at least a week to arrive at something even remotely detailed enough to be useful for the task.

3. Agility

Small businesses typically have a few staff wearing multiple hats, which makes the work needed to operate them concentrated in a few key people doing multiple things at any given moment. This structure often becomes a bottleneck as the company grows. However, when black swans arrive, it can be a blessing: Decisions are vested in only a few places and can be implemented quickly without bureaucracy, infighting or administrivia, resulting in faster reaction times and hopefully better outcomes. Indeed, the company went from researching its response, planning implementation, and execution in under a week.

4. Communication

As soon as management understood the gravity of the situation, communications with the board of directors went to another level in terms of frequency and dialogue. Candid conversations about potential plans, context around the company’s options, and alignment around how best to manage the company through an unprecedented situation have been the result. Communications beforehand were not deficient, but enlisting the board early and transparently has given additional support to the management team and comfort that everyone is on the same page.

5. Creativity

Once an immediate path forward was determined, the company’s leadership team began researching what of the company’s products and services would be more attractive to customers given the operating environment. Although it’s too soon to know just what revenue impact these alternatives might have, early recognition of the value embedded in the company’s ancillary and secondary products have the potential to significantly soften the blow associated with the cancellation of legacy contracts this year. In a similar vein, management is thinking about competitive and complementary businesses that may be interested in strategic conversations over the next two quarters. In both cases, this creativity and ability to see the forest for the trees illustrates the kind of lemonade-from-lemons approach that can be so vital to pulling a business through dramatic disruptions of the status quo.

In Burkland’s experience advising startups and providing CFO services, rapid recognition of a problem and the establishment of a course of action to address it are two key hallmarks of a resilient business. Impacts from COVID-19 are far from complete or even totally understood as we write this startup case study, but as we’ve described in the startup case study above, companies that can act quickly and decisively, flanked by the right tools to make the right decisions, are more likely to come through the other side intact.