Startups and small businesses have suffered a massive setback due to lockdown and it is worse because most of them don’t have backup financial support and are helpless. Even a small crisis affects start-ups the most, but the gravity and enormity of the current crisis is pushing the start-ups over the edge. NASSCOM is the nonprofit industry association for IT-BPM and they organized a month-long detailed survey on 250 start-ups of varied types to fully understand the effect of COVID-19 crisis on businesses of a wide range.
According to their survey results, more than 40% decline in revenue is suffered by 3/5th start-ups. It’s crucial for about 30% of businesses who are suffering over 80% revenue loss. Around 90% of businesses are suffering revenue decline in general. Even the big businesses are suffering from revenue cut but because they have higher financial reserves and bigger margins for sales slumps, they are in a safer place. The small businesses because they lack the security are considering shut down or moving to new business opportunities. According to NASSCOM, more than 50% are considering the aforesaid business shift.
According to reports, 40% want to pivot into growth verticals like Healthcare, Edtech, etc. so much so that a 14% rise in revenue rise is expected in the aforesaid fields. Around 60% of startups and small business organizations are on the verge of shutdown.
Because of the reduction in revenue incoming, severe cost reduction methods are adopted by companies to prevent a shutdown. Several deals and operations have hit a halt. NASSCOM has estimated around 30-40% of participants have stopped their business operations.
“As per our recent survey, 70% startups have the cash to last for just about 3 months, & another 22% have money in banks for 3-6 months” was tweeted by the official account of NASSCOM on 19th May.
To compensate and escape the tight spot businesses are considering staff resizing that would crucially affect many employees and will cater to unemployment.
Almost 60% companies are residing to salary cut.
Some businesses have found an opportunity during the lockdown. Online education, online payment, and delivery services of essential commodities have been untouched if not bettered by the lockdown and many negatively affected startups are collaborating with the affluent businesses to deal with the crisis.
COVID-19 crisis has proved to be a struggle in all spheres and it has been predicted that it could be a while before everything goes back to normal.