Advice from the 2008 recession
Software Equity Group, an outstanding investment bank that has sold some of our companies for us in the past, put on a webinar with 3 CEO’s who lived through the Great Recession. Their advice was excellent. I paraphrase some of it below.
Normalcy will be delayed. During World War II, normalcy was ultimately achieved in a “V+6” timeframe. V+6 stands for ‘victory + 6 months’. The expectations here should be the same; true normalcy wont happen until 6 months after widespread and commonplace immediate testing, so your budgeting/forecasting needs to get you through the next 18+ months.
Employees are understanding. Your employees see what’s going on and recognize the world is falling apart. As such, they’re just happy to have a job, so if you need to make big expense cuts to budgets and even cut salaries by 15%+, employees will understand and it wont be as poorly received as you may think.
Layoff the weak. ‘B’ and ‘C’ players wont become ‘A’ players in this environment. Let them go now, because not only will they be a drag, but there have been many A players that have been laid off or furloughed. This is an incredible time to upskill your team; there is a lot of hungry talent on the sidelines looking for work so layoff the weak and replace them with talent that has been benched.
Pivot time. Everything on the product roadmap should be up for review. There are no sacred cows in this environment, so if you’ve got projects or new products absorbing a lot of resources, consider pausing them. This is also a great time to really review the product and ask yourself “are we mission critical to our customers?” If the answer isn’t certain, it’s time for a hard pivot. Get close to the customer, figure out what they need, and deliver it. That’s easier said than done and it’s good advice in any environment, but with the world changing so drastically, you’ve got the aircover to kill products and go in new directions.
Survive and then thrive. Do what you need to in order to survive. The survivors will come out of this with far fewer competitors and looking at a lot of pent up demand. You’ll thrive if you can just hold on long enough.
Big thanks to Software Equity Group for putting the webinar on.
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