Schools are closed for awhile. K12 entrepreneurs prepare yourself for tougher days ahead.

More than half of all K12 public school students are out of school starting this week

When I posted last Thursday, school closures were just beginning in a few places hit hard by the novel coronavirus, but over the weekend, school leaders made difficult decisions to close schools en masse across the country. As the time of writing this post, more than 30 million K12 students are out of school for the next few weeks. I expect that the closures will continue until nearly every student in a K12 school is home. I also suspect that closures may last for the rest of this school year. The CDC recommends school closure of 8 weeks or more to better mitigate the spread of the virus. Eight weeks from now takes us to the edge of the traditional end of the school year in late May or early June, and I think that’s the best case scenario when schools could re-open.

These closures mean that students miss lessons, don’t get the special education services they need, go without the breakfasts and lunches they depend on, miss out on social and physically active time, and many more interruptions. It means that parents are left scrambling to find childcare and that teachers and administrators will work remotely to try their best to support students and each other through the crisis.

For K12 entrepreneurs, that means adjusting to a new reality where it’s no longer possible to reach students, teachers, and administrators in their school/district buildings. This not only makes it difficult to provide products and services to them, but a prolonged shutdown could be an existential crisis for many K12 entrepreneurs. So, it’s come to this. 2020 is more about extending your runway than about hitting your growth targets.

In the face of all this uncertainty, what steps can entrepreneurs take to make it through this crisis?

1. Dial back your planned growth investments, especially the costlier and more speculative ones.
   As entrepreneurs, we’re wired to invest in growth, but unless you’re the rare startup that feels a tailwind in the midst of this crisis, it’s wise to trim your growth expenses. Conferences and other in-person events are cancelled for the foreseeable future, so this will help save on costs. Those planned sales and marketing hires? First, make sure your existing team is at full capacity before you make any additions. Your product roadmap? Work to reduce your technical debt with your current team and think about extending the roadmap from 6–9 months to 12–18 months. Demand is likely to be less for some time, so adjusting your growth investments to reflect this reduced demand is smart planning.
2. Build a bigger cash cushion.
   If you just raised a large round, you’re in good shape. If not, consider adding on some funds from a prior round by raising additional capital under the previous terms. Ask for prepayment from your best customers. If you don’t yet have a line of credit, now is the time to get one in place. Venture debt is an option, but can be very expensive and dangerous, especially in a low- or no-growth environment. Consider financing your account receivables if you need to.
3. Prepare a severance plan just in case. We all hope that layoffs don’t become a reality, but the longer a slowdown takes place the more likely it is that you’ll need to make some difficult decisions about your team. Put a severance plan in place to prepare for this. Here’s a quick guide to severance pay to learn more.

Making some of these changes will prepare you and your team for a significant downturn should it come. If the crisis passes relatively quickly and the downturn is minimal, you’ll be glad you prepared and you’ll be in a stronger position to invest more in growth.

What else are you doing to prepare for a tougher market environment in K12 education? We’ll explore in more depth how to think about growth in the next blogpost. Stay safe out there!