Live on Lark – Financial & Legal Tips for Startups

Lark is the Next-Gen communication and collaboration platform to work with teams anytime, anywhere. It enables organizations and individuals to achieve their goals and enhances efficiency. Lark is the true all-in-one, mobile-first collaboration experience for distributed teams, built to maximize efficiency and bring joy back to the workday.

Building on Lark’s philosophy, Live on Lark is an initiative by Lark in partnership with MASH Project Foundation to empower fast-growing Startups and help them work remotely in a seamless manner. The workshop included an expert session by Mr. Rajesh Vellakkat on boosting preparedness and building capacities of the startups to address the critical challenges of the global pandemic and learn legal and financial tips to mitigate its impact. It also addressed communication and collaboration challenges faced by startup teams and how they can skillfully put their entire workforce online.

The speaker, Mr Rajesh, began by expressing his surprise as to how the world can temporarily shut down due to an invisible virus. He mentioned that the lockdown of businesses due to COVID-19 has created an unprecedented business situation and startups are probably the worst affected. Affluent companies may survive, however companies with poor cash flow, if they attempt to abide by their contractual commitments, may end up in bankruptcy. 

Speaking about how organizations can cope with the situation, Mr Rajesh said tools and applications that are free of cost are our best bet right now. The firms should focus on changing work patterns and adapt to the new working schedule. Hence, the goal is to be more productive with limited resources, sustain and protect themselves from collapsing and falling  prey to this pandemic.

Since there is a lot of spare time, the organization can focus on monitoring the performance of employees. Analyze their strengths, weaknesses, opportunities,and threats (SWOT analysis) and build on it for the growth of the organization.

Talking about the challenges, he mentioned that there is a possibility of the firm to run out of money, they should also look for other revenue sources. The main aim of the organization shouldn’t be to build or grow but to sustain in the pandemic. Focus on revenue and expenditure balance rather than on growth. Expecting failure, recession, disputes, litigations, insolvency, bankruptcy, contract breaches, supply chain disruptions and unemployment in such a time will not be of any harm rather it’ll keep one ready for unfortunate outcomes.

Moreover, the firm must be ready for negotiations, expect to receive all kinds of demands, review its contractual rights and remedies, and understand the impact of legal principles. The best that can be done today is to indulge in more synergies and collaborations with other firms. Renegotiation of the business arrangements can also be practiced. 

The organization should practice fair play and recalibration. Be conscious of your rights, be fair, be realistic to the ground realities and accommodative, undergo – mediation. SIDBI – COVID-19 STARTUP ASSISTANCE SCHEME (CSAS) can also be considered for small business loans and other advice.

The audience was interactive and engaged by asking their queries from the expert. One of them inquired about force majeure. It refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and prevent participants from fulfilling obligations. The expert said that the force majeure depends on contract to contract. One must go through it and read it very carefully and see if the clauses are favorable and applicable to the firm. All the consequences of invoking a force majeure must be considered beforehand.

A prominent question that came up was whether organizations should maintain a regular pay of its employees or cut the pay or terminate contracts. According to the guidelines issued by the government, no organization is supposed to fire their employees. Although, a fair negotiation can be made by cutting the salary by any acceptable amount of percentage the organization wants. The reason to do so is to maintain stability.  The firm can maintain its accounts, even after the lockdown is over and provide a flexible work arrangement.

Another question was about how to deal with clients  who are not able to pay the amount they agreed to before the lockdown. Mr Rajesh suggested that firms facing this problem must send a notice to the other party explaining its problems and circumstances, and arrangement and wait for the right opportunity.

Mr. Rajesh touched upon almost every point that a startup should know right now. The most important things to keep in mind are that the firm should do more collaborations, focus on sustainability rather than growth, adaptation and flexibility must be practiced and one should be ready for failures coming in their way.

The session ended on a hopeful and optimistic note, with Lark and Mash foundation joining hands to do more such sessions and collaborations.

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