In this time of unprecedented—and unpredicted—disruption, businesses in every industry have been forced to look at their adaptability. It turns out that some businesses adapt well with only slight modifications while others experience drastic drops in productivity, output, and workforce. Sadly, many might cease operations altogether.
Where does this leave your hardware start-up? Key activities such as development, testing, building customer bases, and fundraising have all been impacted. So how can a small company thoughtfully plan for the next three to six months with so much short-term uncertainty? Thankfully, as the global COVID-19 pandemic starts to settle down, now is a good time for start-ups to push forward. From a strategic standpoint, going through a worldwide economic shutdown creates a precedent itself, shining a wider spotlight on factors that wouldn’t have been on the radar three months ago.
For start-ups, strategically building a business for an unknown “next normal” presents huge challenges. Here’s some advice from industry experts, all of whom participate in the Autodesk Technology Centers Residency Program. They give nine tips that address product development, fundraising from both private and public sources, and what comes next.
1. Think About Customers’ Needs When Restrictions Are Lifted
Many things are changing in the bigger economic picture. Eric Klein, a partner at leading early-stage hardware venture fund Lemnos, encourages staying nimble. It’s important to align your product offerings with what your customers will need, not necessarily what they did need. “It’s great if nothing changes in your customers’ world,” he says. “But you don’t want to get caught flat-footed if your customers are adapting to remain competitive or to grow in a post-pandemic economy.”
2. Use This Time to Focus on Noncustomer Tasks
It’s likely that many of your customers have been under the same distancing restrictions as your company. Klein says start-ups should consider this fact when determining a strategy. They may have implemented furloughs until economic conditions improve. If customer interaction slows, use this time to move forward with engineering work to improve functionality and user experience. Also, pay down any accumulated technical debt you planned on getting to “someday.”
3. Have Multiple Models for Your Runway and Understand How They Affect Your Technical Milestones
Although you should always have many variations, be sure to include worst-case scenarios, which should be 36-month-plus models that account for changes to technical progress due to reduced resourcing, says Ryan Vinyard, founder of Vinyard Product Development. “Make sure you understand how this could slow down your progress,” he says. “Plan for what you can do to keep your engineering team innovating and not mired in the ongoing day-to-day of sustaining engineering.”
4. Think Globally for Redundancy in Supply Chains
This is one of those unusual situations where redundancy can be beneficial. “The impact of the pandemic will continue to be unpredictable and likely cyclical,” Vinyard says, “so think outside of your normal vendors and look to other geographies in order to buffer the vendor and logistics shutdowns that may affect different countries at different times.”
5. Prepare for More Challenging Fundraising
Raising capital with venture capitalists (VCs) will be harder to do in 2020. “They will be looking for investment opportunities that can grow in challenging economic times,” Klein says. “Manufacturing and logistics can be resilient, but it’s your job to convince VCs that your customers still need your product.”
He also says to consider other capital sources, such as government grants or customer NRE (nonrecurring engineering) for codevelopment to fund your business. Dr. Ioana Cozmuta, co-founder and CEO of G-Space, adds that if seeking out a government grant or contract makes sense for your company, it’s key to educate yourself on the requirements and be able to weather a long process.
6. Start Proposals Early and Understand the Process
“Preparing proposals and bids is long and messy and will require your patience and determination,” Cozmuta says. Some agencies have simplified and synchronized their processes, but there are still large variations in terms of formatting, requirements, and so on. “Sometimes, instructions packages are hundreds of pages long,” she says. “Find someone who knows the system and has a good track record of doing it before or has been on the other side.” For additional information, referring to the SBIR website and the Federal Acquisition Rules (FAR) on budgetary regulations may be helpful. Both sources underlie the entire set of grant requirements and the procurement process across government agencies according to a single, comprehensive set of standards.
7. Stay Informed About Available Public Funding Opportunities
Look for calls that match your areas of expertise, and take some time to familiarize yourself with the programs. It may also be helpful to get in touch with the program manager. Cozmuta suggests using online resources to navigate and research the wealth of public-funding options. Some sites she recommends include SAM.gov (System for Awards Management; federal agencies are required to use this site to advertise all government contracts), Grants.gov (federal grants opportunities site with an email subscription option for receiving new announcements), and BidNet (gathers federal and state requests for proposals into one site).
8. Register Your Company With SAM.gov
This is required by every government agency. Because the approval process usually takes two to three months (some elements may be fast-tracked at additional costs), Cozmuta stresses registering as early as possible. Make sure you have the necessary information, such as an EIN (Employer Identification Number) and a DUNS (Data Universal Numbering System) number. Note that there are many predatory sites that look legit and claim to “be or represent” the government, but the true process should be cost-free by default.
9. Stay Connected With Your Team
Everyone deals with these abrupt changes differently. Think about how this time can be an opportunity for building morale in new ways. Vinyard advises asking employees what daily rituals they miss and look for ways to replicate them. Also think about what those daily rituals will look like when returning to the office. How will you replace the coffee chats, hallway conversations, supplier visits, and community conferences that aren’t an option right now? Be aware of what has changed and make sure you work with your employees and partners to stay on the same page in all respects.
Remember, the current state of the world, while disruptive, is not permanent. Many people don’t do well with uncertainty—though entrepreneurs, by nature, often adapt well. By using this collective predicament to think critically and creatively, there is no reason why your start-up can’t turn this time into an opportunity to better serve your market in the next normal.