Fewer than one-third of Atlantic Canadian startups have reduced staff since the COVID-19 crisis began, according to a new survey into the impact of the pandemic on the regional technology sector.
The survey, carried out by Entrevestor and Pivotal Coaching, also indicated that only 16 percent of the region’s innovation-driven startups expect to reduce staff from current levels in the next three months.
Forty percent of respondents anticipated revenues will increase or remain the same in the second quarter of calendar 2020 compared to the first quarter, and 95 percent expect to be in business beyond 2020.
The survey paints a fairly optimistic picture for the startup community relative to other small business sectors facing more severe and in some cases catastrophic losses. For example, the Canadian Federation of Independent Business earlier this month produced a national survey saying only 20 percent of its businesses are fully open, and 32 percent of those that have closed are unsure if they will reopen.
“In times of crisis, startups need to be nimble, adaptable and resilient,” said Patrick Hankinson, CEO of Concrete Ventures.
“The data shows there will be some casualties, but many of them are adapting to come out of this crisis stronger. I just hope this future-looking data proves to be accurate.”
The eight-question survey drew 57 anonymous responses from founders and leaders in Atlantic Canada’s tech startup and scaleup ecosystem. Entrevestor combined it with a similar survey conducted by Hankinson to draw 64 responses for most of the questions.
Given the small number of respondents compared to the actual number of startups in Atlantic Canada, the survey provides insights rather than statistically significant data, but it is the first snapshot.
Other insights include the following:
- 19 companies told Entrevestor they had reduced staff since February, but 13 of those had only cut one position each. None of these companies cut more than three employees.
- 45 percent of respondents predicted staff would increase over the next three months, while 40 percent predicted that staff levels would remain the same with 16 percent anticipating staff reductions.
- Some startups have thrived so far in the current climate, as 16 percent have reported increased staffing since February.
- 35 percent are predicting revenue declines in the second quarter compared with the first quarter.
- 5 percent do not expect to remain in business beyond 2020.
- Three-quarters of founders surveyed are confident they will be able to focus, manage and get through the pandemic.
The relative optimism of this survey is a reflection of the mindset held by startup entrepreneurs, said Pivotal Coaching Founder and CEO Lisa Haydon, a business coach who has worked with entrepreneurs.
She said entrepreneurial personalities are in some respects already primed for the COVID-19 crisis because they have a natural appetite for risk, optimism, high self-confidence and refusal to be discouraged by barriers and nay-sayers.
“This survey shows that a large majority of founders believe they can get through this crisis and that they have companies that will survive and thrive,” said Haydon.
Haydon, whose coaching practice is data driven and founded on psychology, said entrepreneurs start out as managers who are hands-on. But as they grow and scale up, they must become leaders in order to inspire their teams and companies to get things done because the founder no longer has time.
As they navigate through the COVID-19 crisis – which has no playbook – leadership and sales will be key for entrepreneurs.
The survey shows that founders will focus on leadership and sales in the near-term, but as time goes on, founders will be become more sales-focused. The survey found that 49 percent of respondents considered sales, not leadership, the sole or more important focus in the next six months. But that rises to 81 percent when asked to consider the importance of sales vs leadership in the next nine to 18 months.
The challenge is not to sacrifice leadership for sales, and vice-versa, Haydon said.
“Successful growth is about being strategic and determining the right situational balance between sales and leadership efforts.”
Haydon thinks that technology will lead the Canadian economy out of the COVID-19 crisis with new innovations that will benefit from the baptism-by-fire, widescale adoption of technologies for living and working.
This, she says, will open new doors and opportunities for entrepreneurs.
The survey, conducted the week of April 12 to 17 by Entrevestor in partnership with Pivotal Coaching, aims to create an immediate benchmark on how the pandemic is affecting startups, scaleups and other high-growth, innovation-driven businesses in Atlantic Canada. Thanks to Mike Cyr and Akira Arruda for the infographic.
About Pivotal Coaching
Pivotal Coaching is a professional services firm committed to building effective leaders and driving growth for large organizations and high growth companies. We pride ourselves on delivering the best leadership development and sales enablement solutions to our clients in professional services, financial services, and technology. Our proprietary diagnostic tool helps craft a customized coaching and training program for your team based on analysis of your individual and collective mindset, performance and communication styles as well as your habits and competencies. Pivotal Coaching specializes in strategic cohort programs for Leadership Development and Sales Effectiveness.