The Chinese use two brush strokes to write the word 'crisis.' One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger – but recognize the opportunity.
John F. Kennedy
Today, surviving during the pandemic and the economic crisis is the number one question for numerous businesses. In this post, let's try to figure out what startups can do to keep the business going.
Black swans or why crisis means opportunity
Let's start with a little theory. When we speak about force majeure situations like a pandemic, we often hear about "black swans." Back in 2007, the founder of this theory, Nassim Nicholas Taleb, wrote his famous "The Black Swan" book. It described "black swans" as unexpected events and revealed the human tendency to treat those events retrospectively. But, according to Taleb, people shouldn't be looking for answers in the past, focusing on the future instead.
The single good news about the crisis is that black swans help us drive innovations and business transformations. When you have nothing to lose, you're free to experiment and take risks. In their open letter to founders and clients, Sequoia Capital states that in their fifty years of experience, no company regretted making quick decisions during a crisis. They compare the adjustments and pivots businesses make to a natural biological flow, citing Darwin: "Those who survive are not the strongest or the most intelligent, but the most adaptable to change."
Handling the black swans
Everything goes in circles. In 2008, we saw the global financial crisis that caused the slowdowns of entire countries and their industries. At that time, Sequoia created their infamous presentation R.I.P. Good Times that included ways to overcome the effects of the crisis:
- Perform situation analysis
- Adapt quickly
- Make cuts, review salary budget, and rely on the zero-budget approach
- Get positive cash flow as soon as possible
With the quarantine and social distancing, adaptation – especially in employment – is critical. That's why one of the biggest trends today is the shift toward remote work. Even conventional businesses that (at first sight) couldn't operate remotely harnessed the new possibilities. Restaurants and cafes switch to online deliveries. Fitness coaches at the gyms train their clients via Zoom. Even photographers take portraits of their clients through web cameras. Businesses big and small learn to reinvent themselves.
The benefits of remote work for startups
While the world is going remote through trial and error, remote-first companies like Basecamp, InVision, and GitLab have been reaping the benefits of their employment approach for years now. Because remote work means:
- Better productivity. A two-year Stanford study showed that remote workers feel happier and are willing to work long hours. No need to commute, fewer distractions on cooler talks and open-space wars, and the ability to work during personal productive hours are just some of the factors that contribute to the increased productivity of remote workers.
- Improved well-being. Fewer distractions and a proper work-life balance lead to better well-being: less PTO and up to 50% decrease in attrition rate.
- Increased retention rate. It's no surprise that happy workers tend to stay with the company longer. For example, Buffer, a remote-first startup, boasts a 94% retention rate.
- Environmental improvements. Remote work means less energy consumption (since there's no need to run a physical building) and a smaller carbon footprint. In 2018, Americans that took part in the remote work initiative saved 32.000 metric tons of CO2. If you're planning on making your company environmentally friendly, it's definitely a move to consider.
- Extended talent pool. Building a geographically dispersed team means extending the hiring opportunities. You can find people with rare skill sets, suitable work ethics, and even save on payroll since salary expectations may vary depending on the area.
- Distributed resources. Why put all eggs in one basket if you can allocate your human resources in different geographical zones? This way, you can decrease the risk of business interruption due to unexpected "black swans."
Now that we know all the pros of remote employees, let's see how you can optimize your resources by choosing the right remote contractors. By the way, if you're already working remotely, this section can be useful for you too.
A remote in-house employee, a freelancer, or a tech partner?
The world of remote work can be broken into three: in-house remote employees, freelancers, and tech partners. Each option comes with its pros and cons. Let's review them all.
Remote in-house employees
By letting your in-house employee work remotely, you get a dedicated specialist who works specifically on your projects. The communication is easy since there's no difference in time zones and silos. You can also monitor their progress and streamline their workload management.
On the other hand, it can be difficult to find top-notch specialists in your area and attract them to a startup, especially if you can't afford high salaries offhand. Employment and legal issues can also be a burden for the budget.
Hiring remote in-house specialists is worth it if you're ready to ensure a steady workload and bear the legal issues along with employment.
Freelancers broaden your choice of remote workers since you can monitor the whole world for the best talents. And hiring a freelancer is attractive because their price is often smaller.
The latest trend is considering specialists from Eastern Europe for hire: as of 2020, their average hourly rate ranged from $25 to 50 per hour. But these relatively low rates shouldn't discourage you. Eastern European specialists demonstrate excellent expertise, and their mentality and work ethics don't differ much from the Western ones.
Though freelancers are cheaper than in-house specialists, they require management on your side and often demonstrate the lack of engagement and motivation. It's easy to bump into somebody already loaded with 3-4 projects. As a result, you might not be their priority.
It's a good idea to hire a freelancer for short-term projects or when there's not enough in-house expertise.
If you need to extend your team or invite an entire team to the project, opt for tech partners like Altigee.
Since tech partners and agencies have a pool of talents at their fingertips, they can instantly offer you specialists with the required expertise and skills to complement your team. Agencies handle project management on their side and usually follow Agile processes. They keep every team member posted, facilitate communication, and manage possible risks.
It's easy to check the expertise of tech agencies. You can monitor their presence online and on social media, go to their GitHub account to check the level of coding culture, check testimonials on review websites like Clutch, and their engagement in the community's life.
Finally, agencies are more interested in successful cooperation than freelancers because of the reputational risks and the business-oriented mindset. Independent freelancers have almost nothing to lose, while agencies need to keep their business going.
The downside of hiring a tech partner is the price. The hourly rate of an agency is usually higher than a freelancer's because tech partners add extra services like project management and hiring to the price. This makes it cost-efficient to hire tech partners for long-term projects and when you don't want any hassle with managing freelancers.
The bottom line
In the light of the world's pandemic and the economic crisis, switching to remote work is a sensible decision. Contracting employees from other countries allows you to save on payroll, boost productivity, get access to a global talent pool, and more.
If you're interested in long-term cooperation with a reliable tech partner, contact Altigee, and we'll get in touch with you soon.