effect of downtrend on startups and Strategies to succeed
                     
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 startup’s 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 imp[act of a downtrend.
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 customer’s 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.
•Loss Of Demand- 
During downtrends, customers often opt for limiting their purchase or 
even completely stopping it. If a startup company’s 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.
•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.
•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.
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.
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.
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.
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 competitor’s clients
•Receive feedback from own clients
In a Downtrend phase, startups must retain existing clients and 
enhance their relationships to minimize the possible threats.
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
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.
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.