After stocking up on food... (tips to build a business during a down economy)
What started off as a series of Tweets, has morphed into an actual blog post. It is also a sorta response to the gloom and doom posts around building a small, growing company in a down economy. Having founded and helped build one through a couple of down years (aka IT nuclear winter), survived and learned a lot from it, here's a list of things from that experience to consider:
#10. Look out for new competitors who are smarter and nimbler, because cost of building a business is lower in these times. Read Tip #9.
#9. Spend on customer support. good service during a down economy is always rewarded with customer loyalty and repeat purchases when things come around.
#8. Keep revenue focused ppl. focused on revenue. They do not need to hear the gloom and doom. If possible, keep their salary the same to keep their morale from sagging.
#7. Question the revenue model. down economy closes some budgets, opens others. think like your customer would. better yet, ask them.
#6. Unless you have an update for customers/partners, press/PR is a low priority. watch out for ceos wasting time with press in this time.
#5. Try not to listen to every macro trend (esp. the negative ones). as long as internal operations are going acc to plan, it matters very little.
#4. Let go of employees who are taking from the company's energy instead of giving to it. Promote key people during bad periods.
#3. Go out of your way to overcommunicate to current and potential customers. You WILL survive, if you make them miss you.
#2. Put a brake on status quo, and figure out a meaningful path / timeline to revenue (unless financed for 2+ years in which case re-validate the company's timeline and value prop a la the Hedgehog Principle).
#1. Founders take a meaningful salary cut, ask others to do the same. Compensate with stock that vests in a shorter period than 4 yrs.
Are these useful? Do you agree with them? Let me know!
3 comments:
Thank you for this post, Anand. You've expressed very important concept.
The need for focus, teamwork, clarity and a sense of purpose is never more evident than during these periods, the irony being that these behaviors are ALWAYS essential to business.
Every downturn, every setback in one's narrative, becomes an opportunity for an uptick. It is at times like this that the innovations and creative ideas that may get ignored in a more 'comfortable' time can find the light of day. Necessity, after all, is the mother of invention.
The small town where I grew up was stayed alive during the Great Depression (so they tell me, I wasn't around) when one manufacturer decided to stay in business, pay employees what they could, and stockpile product (wood furniture). When the turnaround came, they were able to hit the ground running, and the furniture business is the mainstay of that town (Jasper, Indiana) to this day.
I began my career at Disney in the early 1980s, when the art of animation was absolutely at its low ebb. Many older folks were thinking it was the end of the form altogether. But the young artists and animators could not have been enthusiastic, and all of Disney's successes in animation since, including Pixar, have come out of that positive, optimistic energy with which the 'new kids' imbued the form.
In short, we all share the responsibility to make good news!
amen, mike. your comment prompted an interesting idea. look in your inbox mr.hat!
This is exactly the right attitude Anand. Now is a time for entrepreneurs to dig deeper, look more carefully at their own operations and at new opportunities. Times like these are the best time to step back, review, and plan for making the most of the upswing when it arrives.
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