There's a lot going on in the world right now. The state of the market is uncertain, and a lot of folks are trying to figure out what to do. This is new territory for many startups. Money isn't being raised like it was, and valuations are down from last year.
Founders are stressed – they’re worried about cash flow during a period in history when gas is $6 a gallon or more in some parts of the country, and inflation is sky-high everywhere.
One thing to remember though, is the adage: cooler heads will prevail.
This is a time of diligence and paying attention to the details to solidify infrastructure so that when things level off, you’re ready.
Because we work with so many companies of all sizes, we put pen to paper and talked about what we think are some of the smartest moves a startup can make during this uncertain economic time.
Put your customers first
The market is volatile; up is down and down is up. Because of these conditions, it’s time to keep trucking along and do the best with your greatest asset: your customers. Listen to your customers and focus on making them happy with the tools you currently have.
Can you find new ways to please the existing base? If so, that'll only help raise the bar and keep new customers coming into the funnel. Too many companies, both tech, and non-tech alike, put too much emphasis on closing their next customers at the expense of their existing customers’ satisfaction. Client retention is SO IMPORTANT.
Even just being good at responding to customer inquiries, or quickly fixing those annoying bugs or glitch, whatever the case may be, there are always cost-prohibitive ways to keep customers happy and those subscriptions renewed.
Understand that this is a new market
This is not the market post-recession back in 2008, and this is not the boom times of 2018. We're dealing with a whole new ballgame. There could be a speedy recovery if we hit a recession again, but the average bounce back time is about 12 months, hitting bottom and building back upward.
Think about what your company brings to the table and understand how it will work when people spend less. This is also a great time to work with a professional bookkeeper or accountant to make sure your books are clean, and your expenses are lean.
Re-strategize and be realistic. This market isn't the same as it was in 2008. Instead of quarterly planning sessions, it might make sense to plan weekly or bi-weekly.
Planning for the most likely scenario is always a more intelligent move, thanks to provable outcomes, or at least manageable ones.
Are you keeping investor contacts warm?
We're not saying you need to be checking in every other day, but it doesn't hurt to get a finger on the pulse of any potential investors—a quick check-in never hurts anyone. Keep the contacts warm, and let them know of any significant wins or shifts in focus. If you can get one or two on board, that goes a long way and could lead others to invest, even during this time.
Focus on what inspires you and the team
We talked about keeping customers happy, but is there anything you've always wanted to do with the business but didn't have the time? Even if it's a redesign of the brand or maybe an easy add-on, what can you do to keep you inspired? Find smaller projects with meaning to maybe pepper in toward the end of the week to give incentive toward focusing less on being overwhelmed. Remember, this time should be about stability, and not obsessive growth metrics.
Don't spend money you don't have
Pay attention to the runway and burn rate right now. Cash management and ensuring you've got enough to keep the business moving for at least 18 months should be a priority.
Re-work your forecast to manage expenses and drive toward positive cash flow. If those are not in place, establish and closely monitor your KPI’s. Slow hires if needed and put an emphasis on being capital efficient even if it means slower revenue growth.
Can people work from home? Do you need an office, or can you work out of a shared space? Think of ways you can keep the business running while keeping spend margins low.
No one said you have to nickel and dime your team, but maybe you don't need that big office, and the new pool table can probably wait.
Be honest about the company to new hires
Don't promise the moon and stars. Don’t candy coat or offer swaths of promises “when you get Series A money” and instead focus on the cash coming in. Some people aren't motivated by huge success but instead care about problem-solving and want to help you do just that.
The intelligent people know there's a lot of work in a startup. If they wanted it easy, they'd have gone to work for an enterprise. Be honest about where you're at in the company's journey and illuminate how new hires can help solve problems with their specific skills.
When it comes to future planning, consider doing this
Think about key uncertainties and how you can plan around the unknown. Do some scenario planning, so if something pops up, you’re ahead of the game and already know how to solve it. Give these scenarios names and narratives, so you're thinking realistically rather than in the abstract. (Worst case + middling case + best case)
Check out what your expenses are – run through everything. There are probably perks you're offering that no one's using, and cutting these costs could help the company get leaner.
Think about what marketing looks like: are you paying a ton of money for channels that aren't converting? Stick to what works, especially right now. There's no crystal ball in how new customers will convert in a year.
Founders need to take care of themselves
It seems like it’s way too easy to burn out these days. Don't do that. Burnout is the number one way to lose focus on bigger goals and see companies go up in flames. Get rest, take time off, and focus on . Health is wealth. Burning both ends of the candle will do nothing but cause more problems. Pay attention to what's going on with you, and don't kick the can down the road.
This leads us to our final point:
We don't have to explain how crazy life is right now. Compassionate leaders understand their teams are made of people, not cogs in the wheel. Your startup consists of humans doing their best. Just be present and there for them. Just as much as you need time to process and deal with burnout, so do they. Everyone is carrying around a lot. And if nothing else, coffee is always a great place to start.