Ten tips to ride the economic slowdown
After all the dire warnings given by various VCs, here is a more positive list of recommendations sent from one of my friendly VCs:
- Don’t panic! Economic cycles are part of life. Best companies are built in the worst of times. If you panic, your employees will panic.
- Conserve cash. Delay spending on non-critical things that do not result in revenue generation. Renegotiate vendor contracts, rental contracts, etc.
- Improve productivity. Get more out of your team.
- Differentiate between high and low performers. Reward the high performers. Counsel out low performers.
- Optimize the organization. Hire critical talent as they may be available at a reasonable cost. Transition or re-deploy non critical resources.
- Continue selling and marketing your product or service. Being in front of customers and vendors builds confidence that you are a long term player.
- Focus on growth with an eye on profitability. Since the cost of capital is high today, be cautious on how much capital you raise to invest for growth. Avoid over-investing in the business in the hope for exponential growth in the future.
- Communicate with your team internally. It Make sure your team understands that you are building a lasting and successful enterprise and that some of the cost cutting measures including layoffs are necessary for the health of the company. Anxiety levels can be high in tough times.
- Act swiftly. Try to deliver any bad or tough news at one shot to the company. Continious bad news can affect morale and instil fear.
- Have fun! Make sure your team is having fun. A happy environment builds loyalty and performance for the long term.