When the going is good, SMEs in the tech sector have the potential to grow faster than larger corporate players.
But when times are tough, their tight revenue vs outgoings ratio leaves them more up against it – and that’s when survival depends on their ability to adapt, or ‘pivot’. Here are five key areas where leaders from the tech scene are already beginning to focus.
Raising funds
With venture capital being pulled or delayed across the board in recent weeks, many founders are concerned about their ability to stay afloat. Unable to go out and meet investors face to face, some have switched to online crowdfunding.
Paul Graham, founder of one of Silicon Valley’s most powerful venture capitalist firms Y Combinator, suggests startups who can raise cash during a recession have a disproportionate chance of future success. Airbnb was rejected by the first seven VCs they approached but raised funds in the wake of the financial crash in 2008.
Scottish start-ups who get investment rounds over the line in recent months have what Trickle CEO and founder Paul Reid describes as a “runway to grow the business, hire and continue to develop its product roadmap”.
While the Trickle team has had to hold fire on the release of its latest product, it has offered its existing employee engagement and wellbeing platform for free to maintain momentum.
Value propositions
Product Tank Edinburgh co-organiser Russell Henderson says companies must now understand and act on how value propositions – or selling points – are changing towards a post-coronavirus world. Start-ups will have to adjust their offering to a world where remote working is the norm and keeping people connected online is key.
Product Tank is doing so through webinar series #WebLunches with speakers including Trickle’s Paul Reid, Care Sourcer CEO Andrew Parfery and payments-as-a-service fintech Modulr’s chief product officer Jakub Zmuda.
Henderson makes an important distinction between the current crisis and the financial crash of 2007 to 2009.
“Digital is now the main driver of the economy,” says Henderson. “Every business needs to be digital as it’s digital that owns the customer relationship.”
Remote working and digital skills
The tech sector is already one of the biggest employers of remote workers and this trend is now only going to increase. So we should focus more on the digital skills required for remote working, says Raoul-Gabriel Urma, CEO and Founder of Cambridge Spark, the AI training group bringing the Edinburgh Bootcamp to Scotland this September.
He says: “There are several reasons why digital skills are more vital than ever for people and the economy. Firstly, tech roles typically just require a computer to be productive.
“This means the tech workforce can deliver value from anywhere. Secondly, many companies are going to be looking at ways to reduce costs through automation or to derive new value from their data and tech infrastructure in order to stay competitive in a changing economic environment. This is a very relevant time to invest in digital skills and help these companies be successful within the Covid-19 crisis.”
Hiring and firing
Companies with an eye on the long term are not just trying to cut costs by shedding staff – they are making an effort to support team members’ wellbeing and mental health. That’s because word spreads quickly and, when things return to normal, those companies will be competing for scarce skilled employees again, says Lisa Thomson, Managing Director and Founder of HR specialist agency PurposeHR.
“We are seeing companies cost cutting, revising their growth strategies and concerned about the potential of future investment, but there are also some companies still hiring, with virtual onboarding programmes,” she says.
“Our clients are really focused on supporting the wellbeing of valued team members in these tough times, especially from a mental health perspective.
“People will remember how their employers acted in these circumstances and that this will have implications for employer branding and reputation in the future, so treating employees with respect, dignity and empathy while taking any difficult decisions is crucial.”
