Impacts of Downtrend on New Startups and Strategies to survive

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What Is A Downtrend? A downtrend is a serious
issue often faced by businesses. Small businesses
get affected by it more than others. A downtrend
is a change in the demand for stocks in which the
investors are not interested in buying the stocks
of a business in fact they want to sell their
existing stocks.  A downtrend is a result of a
startups business activities and security. Most
startups surrender to the downtrend. A startup
can face a reduction in their cash flows, and
demand loss, they may be forced to reduce their
staffing, and also be forced to limit their
marketing. Startups suffer big time in a
downtrend but they do have an opportunity to make
changes and stay afloat. Implementation of key
strategies can save a startup from succumbing to
the impact of a downtrend.
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• Impact Of Downtrend On Startups
• A downtrend affects startups to a heavy extent
  and many startups fail to make a comeback. A
  downtrend can impact a startup in many ways like-
• Reduction In Cash Flow- 
• There is a common issue in startups that they
  operate on very tight cash flow. As a startup
  generating heavy funding is difficult they need
  to follow this method of tight cash flow. If a
  delay in payment occurs from the customers end
  the whole cash flow cycle gets disturbed. During
  a downtrend, companies may face a lack of funding
  and it will automatically reduce the cash flow.

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• Loss Of Demand- 
• During downtrends, customers often opt for
  limiting their purchase or even completely
  stopping it. If a startup companys target
  businesses or clients go out of business then the
  startup might as well succumb to losses. Loss of
  demand can create a heavy impact on the startup
  and its business activities. 
• Reduction In Profits- 
• There is a common trait between customers and
  business owners that both limit their spending
  during downtrends. So a startup whose financial
  resource is dependent on sales is going to suffer
  big time. Customers limiting their expenses can
  create difficulties for startups in generating
  their revenue. A loss in revenue is all a loss in
  profits.

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• Credit Crunch- 
• Not just customers and business owners limit
  their expenses. Lenders or investors may also
  reduce their outflowing cash. This creates more
  pressure for startups as it makes the credit area
  a huge challenge.
• Down going Stock Prices-
• Reduction in profits, and cash flow reflects on
  the financial reports of a startup. This will
  directly impact the stock prices of the business.
  The impact can be as heavy as the dividends can
  disappear.
• Downgrading Product Or Service Quality- 
• The worst impact of a downtrend is the downgrade
  of product quality. Due to limited resources and
  funding startups are often required to decline
  the quality of their product or service.

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• Reduction In Staffing And Productivity-
• Heavy losses in revenue of a startup create a
  shortage of financial resources. This shortage
  makes the reduction in staffing inevitable.
  Startups look to minimize their expenses in every
  possible way. Reducing staff is the most common
  and easy way to control expenses. The staff
  reduction will reduce productivity as well.
• Restricting Promotional Activities- 
• One of the biggest tools for businesses to gain
  high sales and revenue is marketing. Although it
  is quite an impactful and effective practice,
  startups are forced to restrict all types of
  promotional activities in a downtrend.

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Strategies Startups can Adopt In the Face Of
Downtrend

• 1. Observe The Signs
• The early stage of a downtrend is the best time
  to implement solutions or apply strategies to
  overcome the challenges. Observing economic
  changes and financial panic among consumers can
  help in identifying the possibility of a
  downtrend.
• Economic Change- Ups and downs in the stock
  market are early signs of a downtrend.
• Financial Panic- Customers will react in
  financial panic during hard times. The abnormal
  dips in sales are big red signals before a
  downtrend.
• Observing the signs early can offer startups time
  to strategize and minimize the impacts of the
  possible downtrend.

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2. Flexible Agreements According to experts,
flexible contracts offer businesses to deal with
downtrends without completely transforming their
businesses. As startups might find it difficult
in transforming their business, flexible
agreements are a better solution. The flexible
agreements allow startups to plan for the loss of
business and areas to make up for costs.
3. Accelerate Training Excelling the skills of
employees can offer huge benefits to a startup.
As a downtrend can impact and force the staff to
be reduced at a startup keeping the
high-performing employees ready with all
essential skills and training can be a game
changer. As the production damage will be
minimized if employees have the essential skills.
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• 4. Invest In Promotional Activities
• Startups often completely stop their marketing
  campaigns during downtrends. But the downtrend is
  not affecting a single business so many
  businesses opt for stopping their marketing
  efforts.
• Customer Trust- During a downtrend, if a startup
  promotes itself customers may believe that the
  business is stable in hard times as well. It will
  create trust between the customer and the
  business organization.
• Low Costs- As most businesses opt for stopping
  marketing practices, the cost of advertising
  drops. So a startup can avail a huge marketing
  opportunity and that too within a low cost.
• High Sales- With marketing, a startup can have
  visibility during the tough times of a downtrend.
  This will directly impact the sales of the
  company.

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• 5. Enhance Client Relationship
• The downtrend is a situation where existing
  clients will require more attention. Selling
  products or services to existing customers is a
  lot cheaper than selling to new ones.
• In order to enhance client relationships startups
  can-
• Concentrate on top clients
• Observe competitors clients
• Receive feedback from own clients
• In a Downtrend phase, startups must retain
  existing clients and enhance their relationships
  to minimize the possible threats.

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• 6. Downsizing Inventory
• Inventory is a costly affair. In downtrends
  maintaining an inventory can be really
  challenging. For startups, it is an ideal way to
  get rid of the extra inventory and invest in the
  high selling products or services. 
• 7. Manage Cash Flow
• As a downtrend directly impacts the cash flow of
  a startup, it is important to manage cash flow
  for startups. There are a few steps in managing
  cash flow in an improved manner for startups-
• Paying down debts
• Collect in an aggressive approach
• Set periodic KPIs to monitor the financial
  stability

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8. Set New Goals A downtrend may force a startup
to change its business practices so it is better
to redesign the process with new goals.  Once the
goals are decided a startup must inform the
stakeholders and if the stakeholders are not
agreeing, the startup must convince them of the
reason for new goals and benefits. 9.
Automation One of the most innovative approaches
is automation. Although setting up automation
processes in a startup can be challenging due to
its costly nature of it.  Automation can serve a
startup by completing repetitive tasks more
efficiently and effectively. It will be
beneficial if the startup needs to reduce
staffing due to a downtrend.
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10. Ensuring Product Quality Due to the
downtrend, many companies may opt for
compromising the quality of their product or
services. It will straight away impact customer
loyalty and experience. A startup must ensure
that the product or service quality stays ahead
of its rivals. It will ensure better customer
experience and relationships.
Conclusion The above discussion on impacts and
strategies to minimize the threats proves that
the downtrend is a serious topic. It can destroy
startups or even small businesses.  On one hand,
startups can be destroyed due to downtrends on
the other hand it also offers golden
opportunities. Creating customer trust and brand
reputation with the reduced costs of advertising
can offer high sales.