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Bengaluru, NFAPost: Like Samira Rao we have lots of startups who are suffering to run the business now as they are finding it difficult to satisfy both their clients and those who are working with them. Here the business leaders are wonderstruck and what to do next. Government with its policy initiative and collective efforts of entrepreneurs can some extent do damage control. But again how long?

In a candid interaction with NFAPost, Samira Rao opens up his thoughts on the magnitude of the situation and possible ways we can ameliorate its impact.

 

“If you are a QuickBooks customer, you can manage both payroll and accounting from a single sign-on by enabling Paybooks payroll software from Intuit’s app section and enjoy auto-update of payroll transactions to QuickBooks accounting tool. Now, with 3,000+ companies in India who love Paybooks I have made the company a successful tech company,” said Samira Rao.

But the onset of the Covid-19 has dramatically changed the business scenario for him as like other companies, challenges both in managing the company from home and servicing the clients with limited resources.


“The pandemic Covid-19 has really changed the scenario. Being tech-enabled, startups made an easy switch to Work From Home. Unlike big corporates that handle sensitive data or personal data processes and hence cant allow for an easy Work From Home, smaller startups don’t have such issues,” said Samira Rao.

Startups are now facing the problem of achieving profitability as a short-term or even medium-term goal. To make it reality they will have to work with VCs and then look at the option of availing cash via lending.


“We have to form a special task force to consider how to build lending schemes for startups. Small Industries Development Bank of India (SIDBI) small move to give financial stability via schemes like COVID-19 Startup Assistance Scheme (‘CSAS’) is really a welcome move. But the bigger problem startups face – what to work on? Can I take anything home?,” says Samira Rao.

It is a reality that tartups usually have a very thin cash reserve and mostly depend on monthly cash collections from existing customers and new sign ups/accounts. With most of the companies going on freeze mode, startups’ cash flows have almost vanished. Cash flow is the life blood of any business and without that they will find it difficult to continue the business.


While cash inflows have trickled down, Samira Rao points out that outflows don’t seem to end. 80% of the spending in a start up would be typically on employee expenses and there is no way to curtail this. Their other maintenance expenses like building rent, hardware and software expenses will continue. Since work from home is in practice other new software acquisition will become a necessity.


“It is really now a Catch 22 situation for startups – do I start cutting down salaries or even worse – laying off my committed team? Will I be able to get a decent team back if my team is cut down? How should continue with the current team?,” said Samira Rao.

It is high time that both central and state government should come up with an action plant. “It is a relity that there is no proactivesteps right now form them as required by startups and small companies. Of course, they need to work on administrative measures to curtail the spread of the pandemic. Any help on postponing the statutory payments like TDS, PF, ESI, GST etc would have helped small companies in a big way,” said Samira Rao.


Some options on the cards for the government without involving any cost –

  • a. releasing all refunds of TDS/GST
  • b. asking companies not to deduct ESI and PF contributions from employees and waiving the employer contributions for 6 months.
  • c. Extending the due date of statutory payments by 3 months without any interest

The impact chain of Covid-19 on startup is very vicious and will leave 50% of startups with no immediate future.  It is a reality that the customers are not responding properly in this situation.

Survival is key and cash is king in these testing times.

Startups, from earlier thinking on how do I get the next big order/how do I plan my team expansion/ when do I enter a new market/how do I ace the next customer segment, now has to think on Is anything left? For how many days can my startup last? How many team members do I kay off? Will I be able to tide over these tough times?


Samira Rao summarises the fate of startups: Luck are the startups who firmly believe in “Tough times don’t last, tough teams do” and survive to see a bright day.

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