With a global pandemic and financial crisis, companies have found new challenges of late. COVID-19 causes disruptions to everyday life across every industry, and many businesses have been forced to adjust to this “new normal.”Others have suffered significant financial losses or layoffs.
Even with the long-awaited COVID-19 vaccines rolling out, it’s difficult to tell what the new year will hold. Acccording to one survey by KPMG, CEOs have confidence in an economic comeback. But there are still so many unknowns, twists, and turns ahead, that the future is far from certain.
For startups, this year promises to be complex and full of surprises. So here are some of the key startup challenges and risks to consider.
1. Continued supply chain disruptions
Nearly every aspect of doing business was greatly affected by the pandemic. And it’s likely that continued supply chain disruption will be a major challenge.
We've already seen some companies struggling to keep up with the demand for essential items, leading to shortages. Just like grocery stores, some startups may face shortages of crucial items due to new travel rules, a lack of warehouse staff, and more.
If your business relies heavily on third-party vendors this adds another layer of risk. Especially if you outsource your supply chain internationally.
The simplest solution is to look for local suppliers, where you at least can easily stay up to date on lockdowns and other working restrictions. And you're also less impacted by border closures this way.
You may also want to explore diversifying your vendors (and product origins). If one country is particularly hard hit by the virus, you'll still have other options.
2. New technological expectations
If there’s anything the pandemic has taught businesses, it’s that if you fail to adapt and innovate, you may not be able to keep your company afloat. Technology will continue to cause disruptions - as well as huge steps forward - in many industries.
Companies need to keep up with changes in consumer behavior, like increases in online capabilities, ordering, delivery, or payment management.
You also need to look internally. Do you have the software and systems in place to keep employees happy and productive while working from home?
The downside to this new technology is the increased potential for cyber liabilities, especially while many companies continue work-from-home policies. Cyber criminals can more easily hack home wi-fi systems, leaving sensitive company information vulnerable.
A single data breach could cost your company thousands of dollars in notification fees and legal settlements, not to mention the damage it could do to your business’ reputation.
One investments you may wish to make to help mitigate this risk is Cyber Liability insurance. It’s a commercial policy that covers claims related to cyber attacks, such as loss of digital assets or data breaches.
3. Filling the talent gap
Unemployment and redundancies reached record levels at the peak of the pandemic. But as the economy recovers, companies will likely look to fill their talent gaps.
While there are many benefits to working from home, implementing the necessary oversight will continue to be hard.
This leaves a company vulnerable to more lawsuits. In order to mitigate these risks, it’s necessary to have proper HR protocols in place for remote workers.
In addition, you should double-check to make sure you have the necessary insurance policies in place. One such policy is Employment Practices Liability Insurance. This policy will protect your business against claims of discrimination or wrongful termination.
On a less scary level, you should also ensure that you have a sound strategy for hiring while remote, and that new employees can pick up their duties and run with them easily.
Stay prepared for serious startup challenges this year
These are just three startup challenges and risks that might particularly affect your bottom line in the coming year. Not to mention the usual challenges with managing employee expenses, reducing customer churn, and building a thriving company.
Make sure to determine and understand the risks involved in your industry. While some - like tech and health - have grown quickly in the past year, others have struggled. So look for clues all around you.
Most important, stay innovative to keep up with the latest trends. And do what you can to keep your business and your customers safe. Good luck!