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Coronavirus And Startups: Contingency And Business Continuity Plans Come Into Focus

Coronavirus And Startups: Contingency And Business Continuity Plans Come Into Focus

With stock markets crashing, startups need to have a contingency plan to deal with coronavirus

VCs such as Sequoia Capital have urged founders to plan for such tough times

3one4 Capital's Siddarth Pai believes that startups need to find a backup for every possible situation

With over 60 confirmed cases of coronavirus and Covid-19 in India, lakhs of passengers screened and all Visas to India now cancelled, the country is well and truly in the midst of the battle against coronavirus. From Delhi to Mumbai to Bengaluru, the major startup hubs in the country have all borne the impact, while major international hubs look set to be blocked for many weeks, if not months.

While stock markets around the world are crashing, startups and businesses can’t stop functioning. But even here there are new rules in place as the world tackles coronavirus. This goes beyond work-from-home that many startups such as Paytm have already implemented thanks to an employee testing positive for coronavirus. However, the responsibility stretches beyond this and towards keeping startups running even in coronavirus outbreak circumstances.

Over the last few weeks, we have seen investors like Sequoia Capital issue letters to founders about how to manage business better and plan for contingencies in case things go further south. Many companies have improved their sanitisation practices, and are conducting health checkups, but founders have to think beyond the present and look at the future where external elements may impact the business.

Siddarth Pai, founding partner, 3one4 Capital believes that until now, startups had short-term business continuity and contingency plans for stuff like internet not working or power outages, but with this outbreak, the focus has come on managing the business in situations where there is the unavailability of key employees or loss of life happen. After all, there’s a human cost involved in such epidemics and sometimes it can hit close to home.

He iterated that while larger companies have made such plans for a long time, the burden is now on startups to create a clear vision of how things should work if there are any mishaps — ranging from employee unavailability to senior leadership unavailability.

“What we had right now is Black Swan event — we had a very larger service provider going down and then you have the virus outbreak which prevents people from moving and continuing business as usual. So this has actually been a wake-up call for startups to make sure that they have backup plans in place if any contingency does arrive,” Pai added.

For instance, a recent note from Easy Home Finance accessed by Inc42 has documented the plan of action for the business if the office building or an employee or a senior employee is quarantined. It laid out the team structure in such a scenario, which makes the process clear to all stakeholders. It also stops confusion from setting in among rank and file, believes Pai.

Further, it also breaks down the job responsibilities for the team members in case managers or team leads are unavailable due to quarantine or illness. Easy Home Finance also recommends that the responsibilities of any unwell employee be divided among the team.

“Besides, the services of external agencies will also be availed to take care of any type of eventualities, which will hamper the smooth operations of the company,” Easy Home said in its document.

Pai also touched upon some of these broader topics. He said that the startups need to identify what dependencies they have. From employees not being able to come to work to an employee being quarantined, Pai said that the businesses need to identify the plan for such situations.

This includes backups for tools or products that they use. “For example, if Slack goes down, doesn’t mean your business won’t run,” Pai explained. He also said that the companies may also need to look at alternative service providers for the technology team to cloud service providers to accounts team and other parts of the business.

He also emphasised on planning for leadership succession, in the worst possible scenario, or even for a temporary absence such as a prolonged quarantine situation. Pai said that the idea is to search for backups for everything, and ensuring that the startups have a migration plan in place for coronavirus impact.