What do you want to be post-COVID-19?
The COVID-19 health and economic crisis is in Month Two for most of North America and if one thing remains certain it’s that everything remains quite uncertain. Hopefully, by now you have gone through a couple of iterations of scenario planning for your business and have identified various approaches to keeping the lights on. If you need a crash-course on navigating in a downturn the team at First Round Capital put together a comprehensive ‘Founder’s Field Guide to Navigating this Crisis;’ which is a must-read.
There has been plenty written about cutting costs and what to expect from fundraising so we won’t spend more time on these topics other than: plan for things to get more challenging from here and re-evaluate your plans every single day.
The next question to ask yourself each morning, after ‘how do we keep the lights on?,’ should be ‘what do I want my company to be after we get through this crisis?’
By definition, entrepreneurs and small business owners have a higher-than-average tolerance for uncertainty yet tend to be obsessed with many of the finer details of the business. With the confluence of factors at play today [a burgeoning global health pandemic and an unprecedented economic shutdown] it is going to be extremely important to focus on the things you can control and to plan for - but be exceptionally flexible on - the things you can’t. Let’s also assume you have your costs contained and have 18-24 months of runway in the bank. What is that one thing you want to accomplish and what can you do during this transformative time period to achieve it?
If you look at your business through this lens, these next few months present an unprecedented opportunity for you to position your company for the next phase of the journey. Whether you are a market leader looking to modernize your company and improve profitability or a startup looking to overthrow an incumbent, now is the time to position yourself for that move.
Here are a few examples of similar initiatives in the startup community:
New product launches. We previously posted about selling in a downturn and how to find revenue opportunities when it seems nobody is buying. Everyone may get a free pass on slow or no growth this year so take the opportunity to build that new feature or product that will better position your products to compete when customer budgets open up again.
Evaluating new pricing strategies. Since sales cycles are lengthening anyway, quietly try a couple of pricing structures or tiers to see if anything moves the needle on closing business. I expect many companies to offer discounts, freemium models, and revised payment terms to attract new customers and retain existing ones.
Learning/exploring new digital marketing strategies. Costs for most paid digital marketing channels are down 40-50% right now. Email response rates are down 30-50%. There will be a lot of volatility in results so now is a good opportunity to start collecting data and learning.
Implementing new sales tools and strategies. Closing new deals through a direct sales model may prove to be more difficult than usual. Consider opportunities to build meaningful channel partnerships or launch a product-led sales strategy where sales transactions can occur entirely online.
Revising team culture and leadership. Granted everyone is learning new digital culture at the moment but you may find other opportunities to realign the organization or establish new policies that you think may make the team more effective.
Recruiting potential new employees for 12-24 months down the road. Now is a great opportunity to network with potential superstars. People are more inclined to stay in their current positions or flock to a ‘safer’ company but might be feeling restless when the recession ends.
During this recession, many leaders are going to be confused into inaction, complacent to let the market improve, and/or just plain scared. I’m calling this the ‘chocolate chip cookie conundrum’ [bonus points for alliteration?]. Why? I really like chocolate chip cookies; like, a lot... If you put a plate of 30 of them in front of me, there stands a reasonable chance I will scarf down all 30. I’m not going to lie, after a few days of quarantine, I’d probably eaten a few too many. After a couple of days I realized that, if I kept it up, I was going to come out of this quarantine lethargic, bloated, and, well, doughy. Since then I’ve been eating better, exercising more, and talking to my partners about what we want Differential to be in the months and years ahead.
There are going to be a lot of founders and companies that will fall victim to the cookie conundrum during this recession and, when the dust settles, their businesses will be severely out of shape; don’t be one of them! As 1980 US Olympic hockey coach, Herb Brooks, said:
‘Great moments are born from great opportunities’
It’s ok to have some cookies along the way but don’t let the opportunity to rebuild yourself go to waste!
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