Think - AT LONDON BUSINESS SCHOOL

'Be transparent and honest with your staff'

Quick action is vital, but don't forget to be kind, says former London Business School Entrepreneur Mentor-in-Resident Neeta Patel

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How are startups really coping in these difficult times? As founding CEO of the UK’s leading entrepreneurship foundation, Centre for Entrepreneurs, Neeta Patel, is well-placed to give her verdict.

“Optimism is vapourising. There is concern, worry, anxiety and in some cases, blind panic,” she tells Jeff Skinner, Executive Director of London Business School’s Institute of Innovation and Entrepreneurship (IIE).

“Founders who were in the middle of a raise are finding that it’s being postponed. Clients aren’t signing contracts, or are postponing making firm decisions, and startups are running out of cash. Some have three weeks or less of runway left – and any startup that has frontline delivery of products that clients need to touch and feel has had to put them on hold.”

In the latest instalment of the IIE’s #LBSResilientFounders series, Patel, a tech pioneer who helped to launch Europe’s first personal finance website for the insurer Legal & General in the mid- 1990s, urges founders: “Take a deep breath; don’t panic but act quickly.”

Watch: Neeta Patel encourages founders to prioritise their physical health and psychological wellbeing

Immediate action on cashflow needs to be taken to protect your business, Patel asserts. With payroll the biggest cost for many organisations, she says it is likely difficult decisions will need to be made with regard to worker pay and jobs.

“Take advantage of the Coronavirus Job Retention Scheme (the furlough programme) if appropriate. If you don’t believe certain projects will restart within six months or that will be delivered in a different way, then look at staff redundancy. For your remaining workers, cut salaries, including your own. But always act with integrity, transparency and with honesty. Be completely honest with your staff about your company’s financial situation. Treat them fairly and always remember to be kind.”

 

Experienced board advisor and leader in entrepreneurship development, Neeta Patel is the founding CEO of the Centre for Entrepreneurs, which delivers startup programmes in the UK to grow the country’s pool of entrepreneurs. The foundation has launched 160 businesses since Patel joined nearly 10 years ago. Patel is also a non-executive director for Allianz Technology Trust, a specialist closed-ended investment fund with a remit to invest in quoted technology companies around the world.

The views in this video are her own and are not representative of the IIE or London Business School.