Covid-19: Uncertainty & opportunity galore for start-ups

June 18, 2020

Finance Director, Jason McIntosh discusses Covid-19 and opportunity for startups…

“These uncertain times”. Three words that seem to be ubiquitous in communications at present.

Uncertainty is the theme that stretches right across the world as we continue to battle through the Covid-19 pandemic. The conversation has turned to the easing of lockdown measures, and across the UK the devolved administrations are frantically looking at how to reboot their economies whilst maintaining the progress made in stifling the spread of the virus.

This next phase of the fight against the pandemic, one of economic recovery, is on the minds of governments across Europe and beyond. The waters appear choppy and unpredictable, even if financial markets have seemed somewhat resilient. It’s uncertainty, just in a new form.

Read: CBD, Covid-19 and the Immune System

The outlook is no different for any business, from the smallest, newest start-up through to the multinational group. As the populations of most countries across the world get to grip with being forced to stay at home, the ability of a business to attract any sort of customer base is (at best) challenging. Retail businesses have been decimated, with shops unable to open and no clear indication (at the time of writing) for many as to when this might resume in a manner that will allow businesses to get back on their feet. Online retail is, as you might expect, experiencing a surge; however, many consumers are experiencing personal finance issues as well. In short, trying to sell a product or a service to a customer is significantly more challenging than six months ago.

It’s a particular challenge for a start-up organisation. Access to working capital is fundamental to the survival and growth of any early-stage company, and many a start-up will instead be directing cash towards survival instead of seeking growth opportunities. Government support in general for business has been significant, and unprecedented. 

The support available does not, however, extend to everyone. Businesses that don’t have a premises or don’t have anyone on a company payroll (like many owner-managed small businesses) have had their (probably small but growing) customer base decimated and support has been somewhat lacking to date.

Growth for a customer-facing start-up requires directing some of this precious working capital to getting the word out about a product. Advertising spend is important in this regard, and without being able to commit funds towards this growth in a customer base becomes significantly slower, relying solely on word of mouth (although in 2020 clearly social media is a powerful tool for any business to increase their reach). 

Companies also rely heavily on supply chains, and in the early years of a business this tends to be confined to a narrow group; supporting partner organisations becomes a crucial part of a business continuity plan in the absence of diversification of supply.

With revenues hit, access to investment and working capital limited, and cash reserves diverted to survival activities, it’s a difficult world for many early-stage companies. It seems inevitable that many start-up organisations won’t see this period through.

It’s not all doom and gloom though! There does seem to be a culture shift in terms of how communities view local businesses. In Derry/Londonderry, where Real Cannabis Club is headquartered, there has been a real shift towards giving support to businesses as they open up again and try new things; cafes and restaurants providing takeaway services have been inundated with new customers (no doubt excited at the opportunity to get outside and enjoy the sunshine!). It’s great to see this support, and it will be important that this continues as things reach a ‘new normal’.

Read: How to make CBD Oil

That’s not to say that there aren’t other opportunities for businesses. A forced pause on expansion and development plans allows business owners to refocus on the fundamentals. At Real Cannabis Club, that means we have the opportunity to take stock of our journey so far, and make sure that we consolidate the great work that we’ve done so far in making sure our product offering and e-commerce experience align with our company values. We’re able to focus on qualitative, rather than quantitative, growth.

Since launching in the last few months of 2019, we put in place exciting plans to grow the business across Europe and further afield; with Covid-19 taking hold across the world, we’re focusing on the UK and Ireland for now and growing our ‘club’ experience. Ultimately, for us, having a sustainable business that is always aligned with our company values and our commitment to business and environmental ethics is crucial. It’s what we believe in, and it’s how we will always seek to grow. 

In summary, whilst these clearly are uncertain times, we firmly believe in seeking the opportunity in adversity. 2020 so far has only reaffirmed that we believe in the journey that we’re on, and we remain as resolute as ever in our determination to promote the benefits of CBD through our club.


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