Covid-10 Crisis Leadership Guide


Originally published in March 2020.

Your startup was hit by a black swan – COVID-19. Suddenly, you have been forced to think about how to navigate a times of extreme crisis. You may have already had to switch to survival mode. 

As a venture capital investor, I am currently in constant touch with our portfolio companies and founders. In this article, I want to share my thoughts on how you can weather this storm and give you at least some straightforward – but certainly inconclusive and legally non-binding - guidance.

While this article focuses on business topics only, you certainly first have to protect your health and that of your family and employees and mitigate the spread of the virus! Put people first!

As isolation and social distancing hopefully mitigates the outbreak, information sharing hopefully helps coping with these new business challenges. 

Key Resources

Irrespective of your company’s business model, your business needs access to some key resources, e.g. buildings and tools, intellectual property and knowhow, human capital and financial resources such as your bank accounts. You must ensure that you have access to and can employ these resources and need to anticipate the respective obstacles you may face down the road. 

As social distancing mitigates the outbreak, you will be forced to work remotely. Make sure that all employees have the tools they need to effectively work from home and that relevant employees can remotely access all key resources. This may also require you to make digital copies of vital materials.

You have to assume that even with remote work, your employees might be infected by the coronavirus and unable to work. This could also affect your senior management team and may include a complete breakdown of whole departments. You can hope for the best but need to prepare for the worst and establish contingency plans. These should anticipate a redistribution of responsibilities and tasks: what is to be done by whom in the respective scenarios. Make sure such contingency plans include scenarios in which you as the founders are infected too.

You must also ensure that you have access to all financial resources, even if whole countries or cities are subject to shutdowns. You need to be able to access your current accounts and lines of credit and to draw down debt or call on capital to enable you to pay your employees, suppliers and partners. 

Key Partners

Your business model probably depends on products and services provided by key partners. Therefore, you should proactively engage with these key partners to reduce any risk of supply chain disruption. Make sure you have access to products and services you need in order to perform your key activities (which will differ from company to company). 

It may also be prudent to engage with other companies that could become additional or alternative partners in case your primary partners fail to provide you with the required resources. 

You should also look to identify suppliers that you could negotiate better payments terms with. Cash is king and the later you can pay your bills the better your working capital and cash situation will be. 

Customer Success

You are probably anticipating or already experiencing a strong deterioration across customer success metrics like gross retention, net retention, monthly active users, daily active users, referrals, renewals and upsells as well as a declining customer health score. While your customer success team should always have played more than a support function and has hopefully always proactively guided your customers towards a great customer experience (CX) and a strong return on investment (ROI), this is even more important now. Your customers are facing myriad challenges and are looking to discuss these with you. If you are a reliable partner now and proactively engage with your customers, you may be able to mitigate the deterioration in customer success metrics and ultimately revenues. 

You might not be able to proactively reach out to all customers. It is therefore important that you clearly define key target customer segments you proactively want to reach out to. And if key customers reach out to you, you need to react fast. They want and need to be heard without undue delay. 

Your customers may take the position that they want to terminate their contracts. Many times, their actual problem is not your product or services, but their liquidity situation. They cannot or may not want to pay for a certain period of time. Hence, you should always try to understand the interests behind their positions and look for mutually beneficial solutions. You may be able to retain your customers and revenues if you consider (partial) deferred payments, discounts and (partial) waivers, e.g. coupled with renewal arrangements.

Irrespective of your business model, you may also consider creating a task force that brainstorms how you can tweak your products or services so that they support your customers during this crisis. An adjusted product or a freemium version of a product feature that can help businesses cope with their current challenges may even enable you to acquire new customers. And check whether you need to adjust your product and tech roadmaps. The feature or infrastructure topics that had been relevant before the crisis started may differ from those that are relevant now.

Whatever you do, be creative and act in a customer-centric manner.

Focus on customer success.

This will help you retain revenues.


Even if you are not active in the hospitality or travel industries, you should expect to encounter a severe demand reduction and longer sales cycles. Check whether you need to adjust your go-to-market strategy. Analyze how the customer journey has changed in terms of customer reactions at each touch point and the ways in which your conversion funnel is being impacted by the crisis. 

Can you improve your conversion funnel by adjusting your lead generation activities? For instance, you may be tempted to reduce your search engine advertising (SEA) spend, as customer interest declines. While this may appear to be the obvious thing to do, you can assume that many of your competitors will be considering the same action, which could lead to a situation in which you can buy key words and paid website traffic cheaply. Test if this is the case and analyse the respective conversion. 

 Investigate your marketing content. As always, it needs to be relevant for your customers. However, you should now determine whether you can create marketing content that is more relevant for your customers while they are in crisis mode, especially if you provide products and services that can help your customers cope with their current challenges.

Irrespective of whether you pursue an inbound and/or an outbound go-to-market strategy, it is fair to assume that your salespeople do not currently operate at full capacity. Look for ways to use your salesforce effectively. You may consider asking your salespeople to (partially) switch to inbound or prospecting activities or to temporarily join the customer success department that is probably under immense pressure now.


The role of your board of directors is to create value by helping you make material operational and strategic decisions. The current crisis requires you involve your board of directors immediately and frequently. Inform your board members and discuss with them your plans going forward and the bold actions that you want and have to take now. Be honest and transparent! Trust is of paramount importance, always and even more so now. If you have carefully chosen your board members, you are not alone in this crisis. You can tap into the collective knowledge and experience of your investor group, who has probably gone through similar crisis before.

A fully remote workforce means that your employees and teams cannot communicate in person. Your employees need to have virtual communication tools at their disposal, ranging from email and chat services to web conferencing and videoconferencing. While your employees may – by default – use communication tools they are used to, some tools are better suited for specific messages and tasks than others. And communicating with the “wrong” technologies can lead to misunderstandings, ineffective communication and avoidable challenges. You should therefore provide your teams with guidelines about when and how to communicate virtually. E-mail and chat may be well-suited for conveying certain one-directional or immaterial chats but should maybe be avoided in connection with sensitive (interpersonal) topics. Web conferencing and videoconferencing are richer, more interactive tools that should be used in connection with complex tasks and group discussions. 

Virtually touch base with your leadership team on a daily basis and align on key objectives and actions for the day and/or week. Your teams should define specific times for check-in calls that keep everybody in sync and types of information that are to be shared widely across teams, the C-Level team, the CEO and/or the whole organization. 

And you may want to additionally encourage employees to carve out small moments to connect digitally, e.g. for virtual lunches or just a small chat about personal topics and personal well-being.

Clearly conveyed guidelines can make a significant difference.


You should adjust your revenue forecast to the new situation. You should establish a realistic and a worst-case revenue forecast. Forget about a best-case scenario for the time being. Don’t be overly optimistic about a return to normality, the likelihood that a recession does not set in, demand recovery and a strong recovery of revenues. If you are overly optimistic as to your future revenues and your revenues fall short of those plans, your bottom-line and your cash balance will be impacted negatively. If you manage to eventually outperform on a topline perspective, even better!

CoGS & Opex

Prior to the Corona outbreak you might have been in full growth mode and invested heavily to fuel your growth engine. But your focus needs to change now, from high growth to cash preservation and going concern. You need to look into each and every corner to identify unnecessary costs of goods sold (CoGS) and operational expenses that are not mission critical. 

Involve each department and push each of them to submit a list of potential cost savings (in realistic and worst-case scenarios).

Many companies I have looked at in the past have shown signs of inferior productivity reflected in a sub-optimal relation between (new) revenues and headcount. If you have not always ensured an efficient ratio of FTEs to revenues and if you feel your company might be overstaffed, the time has come to streamline your organization and return to increased employee productivity. 

If the going concern of your business requires layoffs, this is tragic, but given the current crisis you need to implement these fast. Remember, you have a responsibility for all employees and stakeholders, and you need to ensure the going concern of your business. 

In some countries, short-term working programs exist under which working hours and salaries can be reduced in order to avoid layoffs and lost income is partially paid by the government. Figure out whether you can tap into these short-term working programs and other measures that are currently being launched specifically for the crisis. 

You may also ask your employees to agree to salary cuts – but be a role model and cut your salaries and benefits first!

The question how deeply you should cut can only be answered on a case-by-case basis, but - as with your revenues forecast – don’t be overly optimistic. As a general rule, you should cut costs deeply and quickly in a way that minimizes the impact on your business. The aim is to get out of this crisis more resilient and being prepared to scale again once the worst is behind us. Discuss your plans and align with your board of directors, as these are material decisions.

Cash Flow from Operations

You are likely leading an operating cashflow-negative business and have been burning cash each and every month in order to achieve high growth and significant scale. But if you run out of cash, your business will hit the wall. You should therefore deploy a turnaround mindset and monitor cash on a daily, weekly and monthly basis. Cash is king! Only you or your CFO should be able to approve payments above a certain limit. 

Needless to say, do not confuse revenues (or MRR, Sales, Bookings) or EBITDA with cash inflow. Disregarding external financing means cash inflow derives from the conversion of your company's EBITDA (or net income) into cash. It is therefore crucial that you do not only forecast sales and EBITDA but also your operating cash flow. In the current crisis, you should make conservative assumptions and expect that the customers that do not churn and can be retained either pay late or not at all for a certain period of time, while you may have to continue to pay your key partners and suppliers on time. The increase in bad debt and account receivables and a potential decrease in accounts payables will negatively impact your change in net working capital and therefore your operating cash flow.

Another negative impact on your cash flow from operating activities may derive from a necessity to increase your inventory now, either because you anticipate supply chain disruptions and/or because you want to put yourself into a position in which you can meet customer demand as soon as the crisis is over. 

Don’t be overly optimistic about the change in net working capital and your cash runway.

Cash Flow from Investing Activities

If you planned to make capital expenditures or to engage in M&A activities before the crisis, you need to check whether the implementation of these plans is still the right thing to do. The best companies divest before a crisis and invest in or after a crisis. But if your company is among those with a lot of cash in the bank, the current situation might also be a great opportunity to cheaply buy assets and companies, including your competitors.

Cash Flow from Financing Activities

Since you have probably been running a business with significant negative cash flows from operating and investing activities, there is a high likelihood that the current crisis has further deteriorated your cash flow before financing activities. Make sure, you have a clear view as to your actual cash balance and short-term liquidity means and that you forecast your cash runway and corresponding need for external financing cautiously.

The financing climate has already changed. At this time, it is therefore prudent to evaluate all possible external financing sources.

Look out for public support programs like the aforementioned short-term working program. The first measures were already announced in various countries and you can assume that there are more to come.

The venture capital funding climate has already changed too, and you should expect difficulties finding investors that can or are currently willing to invest. At the same time, this environment will provide investors with opportunities for large returns (if valuations are adjusted downwards). But when evaluating deal opportunities, they will be even more selective and will be looking for companies with the ability to overcome the obstacles presented by coronavirus with an otherwise intact business model.  

If you have to raise funds now, you will have to convince potential investors that your business model works and that the additional funding provided will enable you to emerge out of this crisis in an even stronger position. You should adjust your pitch deck accordingly. Nevertheless, you should be realistic in this regard. If you face an immediate financing need you may have to ask your existing investors for a (bridge) financing.


In crisis situations, a leader’s ability to lead proactively and react quickly can determine whether a company fails or succeeds. You need to take on this challenge and demonstrate strong leadership. Clear and frequent communication and trust are key. You will have to take some bold actions and convince the entire organization to follow you on this difficult journey. 

When communicating, be careful not to be overly optimistic. For instance, if you have to lay off employees, you should refrain from indicating that no further layoffs are to be expected. The future is uncertain and may change rapidly. 

Act decisively and communicate transparently. Your employees will thank you for realistic messages and strong leadership during this stressful time. 


Navigating the turbulence of COVID-19 is a leadership challenge you have to take on. Be a reliable partner for your employees, customers, partners and investors. A strong focus on customer success is even more important today. But look for mutually beneficial solutions to the problems at hand. Cash is king. Find ways to reduce your cash burn and to extend your cash runway without fundamentally hurting your business (if possible).  

Remember, many of the most iconic companies were founded in or have weathered difficult times like the bust or the Global Financial Crisis.



Newsletter Sign-up

Sign up to Patrick's weekly newsletter about leadership and growth-related topics. You will also get a free introductory guide "Unlocking Your Leadership Potential" and access to the free introductory online course "Unlocking Your Leadership Potential".