Sequoia put out a great post with their take on the coronavirus and suggestions for adapting to the oncoming business slowdown. You can find it here. I’ve spoken with quite a few of our founders as well; insights from our portfolio are below.
It’s ok to lose a year. We’ve let our founders know that 2020 is no longer about growth and may end up being more about cash preservation, streamlining operations, and focusing on product. We have no expectations they’ll hit growth targets and we fully expect this to be a lost year, so don’t attempt to throw cash at sales and marketing spend to push growth. Customer acquisition costs are likely to blow out, so instead preserve the cash and refocus on growth when coronavirus is behind us.
This isn’t the time for new products. Releasing new and improved versions of your current product in all environments is a must. However, this isn’t the time to release new or tangential products. Move your current product vertically, but don’t bother trying to go horizontal with new products. New products aren’t going to meet targets as customers are unlikely to be interested in trying new things. Save the heartache of a ho-hum release, and the cash.
Get that line of credit. If you don’t have a line of credit, call your lender now and ask for one. You may need the liquidity and the deeper this crisis gets, the less likely lenders are to provide new lines.
Work from home plan. If your employees have to work from home or want to work from home, can your business still execute? Now is a good time to make Slack and other ‘virtual office’ tools a part of the culture so that should working from home become a must, you wont miss a beat.
Marketing needs to get creative. With all the cancellations, generating leads from conferences may no longer be an option this year. That means you’re going to have to find alternative ways to generate leads. For instance, in lieu of conferences, identify 20 new customers in a city and then send a rep to have 30 minute meetings with each of them over 3 days. Sure this is less efficient than a conference, but hopefully it results in higher quality, warmer opportunities. Filling the pipeline is going to take creativity to replace conferences.
Stop negotiating. If you’re negotiating with customers over the finer points of a contract, stop. Sign the deal. Every one of your prospects is now a budget freeze away from stopping your sales cycle tomorrow.
Cut the weak. If you’ve got any personnel or projects that are underperforming, cut them now. They weren’t performing in a good environment before this panic, so in this environment with significantly reduced business activity, they have virtually no chance. Preserve your money by letting go of underperforming personnel and projects now.
Identify the strong. Costco cant keep it’s shelves stocked. Netflix subscriptions are going to explode. These companies are going to do better than ever in theory; find a way to sell them your software.
Identify points of failure. This is a good time to identify any single points of failure. If only one person has the passwords or signature authority for a key service or account, fix that or anything else like it.
Preserve cash over growth, make sure you have liquidity, streamline your current operations including trimming weaker performers, and find clients that will spend through this cycle. If you have other insights to add, please email me. We’re in an extraordinary environment and the way every company does business is going to change. Those that don’t change will get hurt or die.