Managing in a Downturn
I spoke at a NextNY event last night along with several others, including fellow entrepreneur David Kidder from Clickable and angel investor Roger Enhrenberg about this fine topic (Roger wrote a great post on it here) and thought I’d share a few of the key points made by all of us for anyone trying to figure out what to do tactically now that Sequoia has told us to be afraid, very afraid.
Hope is Not a Strategy: Your business is not immune. It will do what everyone else’s will. Struggle to hit its numbers. Struggle to collect bills. Lose customers. There is no reason to hope you’ll be different.
Get Into the Jet Stream: Develop your core revenue streams — and make sure they’re really your revenue, not just skimming tertiary revenue out of the ecosystem. Investors will look to see how sustainable your model is with more scrutiny than ever.
It’s a Long Road to Recovery: I don’t care what people say. There is no true “v-shaped” bounceback from a true downturn. Plan for a long (4-8 quarter) time to return to normalcy.
Budget Early and Often: Things change rapidly in this kind of environment. Make sure you reforecast, especially cash flows and cash, monthly when you close the books.
Don’t Stop Thinking About Tomorrow: If you have a real business, you need to be it for the long haul. Keep pursuing opportunities. Keep investing in the future. Don’t pare back your vision and ambitions. Just make more conservative investments, insist on shorter payback windows, and adjust expectations about timeframes.
Leadership Counts: Your people are nervous. They’re concerned about their own bank accounts. Their jobs. Be even more present, more transparent, and more communicative. And set the right tone on expenses with your own decisions. The troops need to know that you care about them — and that the big boss has a steady hand on the wheel.