For the entrepreneurial world, coronavirus (COVID-19) has been a baptism of fire. Some businesses have galvanised during the pandemic and some have sunk, and we want to know why
Fashion firms have switched to making masks. Technology firms have shifted their business models and found new markets. But who are the entrepreneurs who have experimented, shifted and bounced back – and what has helped them get there?
Popular wisdom says that entrepreneurs are more able than established businesses to spot and respond to new opportunities. During the pandemic, they have proven resilient, nimble, and are the potential key drivers of a recovering economy – and our research is dedicated to understanding why this is the case.
In a crisis, small entrepreneurial businesses have no corporate fat to fall back on – they’re the firms which have been forced to think on their feet and improvise, while larger firms are more likely to respond defensively, cutting costs and staff.
But if we could nail down that common thread, the particular mindset and set of circumstances that propel entrepreneurs in a crisis and help them improvise and prosper, we can help policymakers prepare for the crises of the future. We can also understand which innovations work, and, equally as important, which don’t.
Responding and adapting
Social distancing and the duration of this pandemic have created a very particular set of circumstances. Countries around the world are at different stages of tackling the pandemic: China is virtually back to normal, the UK is emerging, Malaysia and Thailand are still in lockdown, and the Philippines is just beginning to ease restrictions. It’s within these countries that our research has taken place, looking at around 60 entrepreneurial ventures and startups.
Some entrepreneurs have tackled the hurdles head on. Dear Curves, a UK plus-size fashion retailer, was forced to find new ways to connect with clients as live events were cancelled. The company’s founder, Ojoma Idegwu, told us how she began instead to collaborate with plus size bloggers and influencers, and how she worked harder to keep her customers engaged.
Meanwhile, Philippine greengrocer Reden Roxax of the Murang Gulay Shop responded to the pandemic by meeting the overwhelming demand for fruit and vegetables as the pandemic took hold. And fintech business Telleroo suffered as financial transaction volumes dropped but was able to react swiftly to the needs of potential new clients, with the pandemic proving the perfect moment to highlight how technology can be a tool for efficiency.
Popular wisdom says that entrepreneurs are more able than established businesses to spot and respond to new opportunities
These companies shared some surprising common ground, regardless of whether they were in tech or traditional sectors, service or product based. During the pandemic, most adopted some sort of social mission – by donating food or profits to disadvantaged people for instance.
More resilient companies shared other characteristics too – from a willingness to experiment, collaborate with like-minded communities and seek out new opportunities, to keeping up with the accelerated shift to digitalisation. In particular, asking for guidance and spontaneously forming associations with other entrepreneurs seemed to boost businesses during the crisis – it’s good, after all, to talk.
Learning what works
Not all new changes have been permanently adopted as the economy settles. Our research among Chinese entrepreneurs shows that eventually their social mission becomes less important as business recovers and entrepreneurs refocus on profits; nor are all experiments successful. One business had to abandon a new product line for grow-your-own salads and vegetables, lacking the resources to consolidate the initiative.
And not all businesses survived. Some proved too fixed on their business model and in their way of thinking – like a rabbit in the headlights, unable to see the bigger picture. These might be business owners who don’t actively engage with the entrepreneurial community around them – some experienced depression and anxiety. Our works shows that if you don’t connect or volunteer and receive advice, you get stuck.
And the flipside is that for a significant proportion, business has boomed during the pandemic, leading some entrepreneurs to feel guilty about their success. They’ve identified new opportunities and tweaked their products or services to meet the demands of COVID-19.
Experimentation has revealed which business models are robust, and potentially scalable. Digital businesses have largely fared better than their analogue counterparts – with staff and systems set up for flexible and remote working.
Asking for guidance and spontaneously forming associations with other entrepreneurs seemed to boost businesses during the crisis
COVID-19 has proven fertile teaching ground for our master’s students in innovation, enterprise and management. Our research has offered them the chance to examine how robust and resilient these businesses can be. They’ve approached this assignment as a live consulting project, using our rich data to analyse a business model and suggesting improvements in light of the pandemic.
We asked for a professional customer-led approach from them, from the questioning through to analysis and feedback stages. This has given postgraduates a chance to practise what they are learning in the real world, and to be able to give business owners useful and pragmatic insights, such as changing product lines or addressing new markets.
And from their analyses we will be able to draw up practical framework which businesses could ultimately use as a kind of stress test for future crises.
When this research culminates next year, we aim to have developed actionable insights for policy and practice – delivered within countries where we’ve been speaking to entrepreneurs. To date, we’ve watched the wave of experimentation that has swept through business communities. We know digitalisation reinforces new business, and community is a strength that should be leveraged. These are elements that policy makers would do well to recognise, in order to build economic resilience at a macro level and haul a post-pandemic economy out of the doldrums – and crucially, be ready for the next crisis.