It has been over a month since the entire country has come to a standstill. Both humans and businesses are fighting to survive another day. The last 30 days have tested our ability to be agile, creative, and positive in the face of adversities. Businesses are being forced to think out of the box or perish.
As a young & struggling manufacturing unit of semi-essential goods, we were faced with a similar choice on the night of 24th March — shut down operations to conserve cash but have limited hope of being able to restart the unit or continue producing without any demand in the market.
Knowing that restarting the unit would require more capital and time than anticipated, we decided to keep the factory operational with the hope that demand would eventually pick up. It was a risk we were willing to take. However, keeping a factory, that employed over a 1,000 migrant workers, running during this humanitarian crisis came with its own challenges.
We had three key concerns:
1) Safety of our employees,
2) Procuring raw materials, and
3) Arranging enough working capital
Rather than trying to tackle all the problems at once, we went step by step.
Our primary focus was to ensure that all our employees were safe. Nothing would matter if we ended up risking their lives. We needed our team on our side to survive. So, without thinking much about our shrinking pockets, we worked on creating a safe working environment within our premises — installed makeshift lodging, arranged for essentials, and mandated the use of masks and sanitizers. However, that was not enough, they needed to feel financially safe as well. To ensure this, we made sure that salaries for the month of March were paid on time.
The next step was to take local and district authorities in confidence. It was critical that they knew we were operating in a safe manner. Hence, we created videos of our initiatives and reached out to concerned authorities to reassure them that everybody was well taken care of. This encouraged government officials to provide necessary support to keep the unit running.
Now our team did not only consist of our employees, but also of local stakeholders. Local authorities helped us scour alternative routes to import critical raw materials. Residents of nearby villages, who are part of the company’s outreach program, used their personal vehicles to transport goods. Nearby “kirana” stores started delivering essentials on credit. Suddenly, this pandemic that had divided the world had reunited this small community.
As we were beginning to gain control over the situation, we realized that we only had enough cash to survive for another week. The company needed a plan, quick and efficient to stretch its reserves. Raising debt or equity was not an option, so our working capital needed to be recycled. We made a list of all the suppliers, customers, and traders we had built a relationship with over the last few years. Customers were cash-crunched themselves; suppliers had limited flexibility to give out credits. Traders, on the other hand, could be our saving grace as they have multiple credit lines and access to liquidity through various sales points.
We called each and every trader on the list to inquire if they were willing to hold stocks and take financing against that to help us monetize our inventory. As expected, most of them said no. Nonetheless, several rounds of calling and convincing, brought a few trusted onboard. We sighed in relief. Now we could at least get through the month without crumbling. However, that was not nearly enough, we needed cushion in case the lockdown lasted longer than a month. So, we went to our key suppliers and re-negotiated payment terms.
Today was the first day we saw last mile sales pick up. April has been excruciatingly long, but we are finally able to see some light at the end of the tunnel.
I hope this story will motivate struggling start-ups to be innovative and strengthen them to prevail through these times. We at Eximius Ventures are looking to support young entrepreneurs. Please reach out to us at email@example.com if you have any questions or comments.