Startups need to leverage resources in this COVID-19 environment
While the recent increase in COVID-19 cases and hospitalizations clearly indicates that this pandemic will be with us for a while, there are actions that every hardware startup company can initiate to leverage trends accelerated by the crisis and minimize the negative impact on their business. Managing cash flow is obviously one of the most crucial factors in any startup’s survival and is even more critical during a crisis like the one we are facing now. A large part of the burn rate for hardware startups is typically salaries, and the decision on when to hire internal resources to support time to market objectives becomes even more critical in this environment due to all the uncertainty that prevails.
Many of the technological changes that were penetrating the industrial and consumer worlds are now being accelerated due to the pandemic. For example, video conferencing over Zoom, Skype, or other conferencing apps, has now become the norm. Experts have said that three years of teleconferencing adoption were achieved in three months. Similarly, remote learning is accelerating its penetration into the marketplace as educators quickly modify approaches to learning in an environment where social distancing is a must. What would have taken years to transition is now taking months. Many companies have found that working from home can actually be quite productive for some jobs and there are several applications that now measure home productivity. They no longer need the physical office space that they once thought necessary and are rethinking their future space plans. In summary, the current pandemic is causing changes in the way we do business and some of these will continue, at least in part, well after the pandemic has gone. Which ones will likely impact you as you scale your business in the months and years ahead? Do you have a product that is being impacted favorably from the current environment where scaling the business quickly and efficiently is the critical success factor? Do you have a business that is being impacted negatively by the current environment where repositioning the product strategy might be the most critical success factor?
While comparisons of hiring in-house resources versus using contracted fractional resources often focus on the differences in hourly costs, this can be quite misleading. Contracted fractional resources take less management attention; do not take up space; do not have paid beneﬁts; do not spend time attending unrelated meetings; and only work as required to get a speciﬁc task accomplished. In addition, they are extremely flexible and there is an abundance of very skilled and experienced resources that can be accessed to address a myriad of sales and operational issues facing any hardware startup. The key, however, is to identify fractional resources with strong references that you can trust! At On Tap Consulting, we practice what our name connotes—you can turn us on or turn us off immediately, with no advance notice, should your business require a pivot, a pause or an acceleration.
A few examples of where On Tap Consulting has recently assisted clients with fractional resources are as follows:
• Identified over 50% savings for logistics costs in Phase 1 of client’s project which fully funded Phases 2 and 3 of the project in addition to yielding additional savings.
• Assisted client whose demand increased significantly due to the coronavirus by working closely with China CM to ramp up capacity and review supply chain resiliency.
• Reduced product transformation cost at client’s CM through benchmarking exercise…ROI for the client was >1000%
• Filled-in as acting VP of Operations as a fractional resource during client ramp up. Delayed hiring full time VP Operations until the company was ready and assisted the client in the recruitment of that individual.
• Supercharged a client’s growth in its biggest retail channel, leading to 8x growth in year-over-year revenue, in turn supporting its successful Series B fundraising efforts
• Filled-in as acting Director of Operations as a fractional resource. Developed and implemented the supply chain strategy and brought up CM in Mexico. Assisted the client in hiring full time person when the company was ready.
• Joined multiple startups early in the NPI ramp when the design was almost complete, established minimal NPI processes to manage the design to production process including CM selection and contracting process.
In summary, postponing hiring expensive, full time employees until product demand recovers is a very prudent way to keep costs down, avoid facility costs, and maintain ﬂexibility in the event that the company has to pivot to a new model to accelerate demand. Utilizing our subject matter experts on a fractional basis for Sales, Operations, Logistics, Supply & Demand Planning, New Product Introduction, Program Management, Sourcing and Procurement, is an excellent solution for managing your business during this unpredictable environment. These fractional resources can be used to accelerate your business by cost-effectively adding the right resource to augment your internal skills and leadership capabilities.
Please contact us to set up a free consultation to discuss how we are helping our clients save time and money during these turbulent times and how we might be of assistance to you.
Founder and Managing Partner
On Tap Consulting