In these times of uncertainty, it’s hard to know just what exactly the right thing to do is. The bad news is that there are no right decisions – every decision you make for your business will be hard and its implications uncertain.
The good news is that we’re here to give you a few tips on how to make the best of these difficult times and summarize some key takeaways from Reforge’s Growth in Turbulent Times B2B seminar.
- Should we be cutting costs? If so, by how much?
- How did companies weather the storm in past recessions?
- Are the opportunities to accelerate and make lemonade out of lemons?
- What signs should we look for in order to make smart decisions with imperfect data?
We’ll start by giving you a sort of litmus test for resting how long your runway is, then move on to some tips specifically for those of you who are operating on a pretty short runway, and then some tips for those of you with a long one, and conclude with some general tips that everyone can benefit from.
As a general rule of thumb, a runway that’s longer than 2 years means you can take some pretty aggressive, possibly risky action to boost your growth. A run that’s shorter than 2 years means that you need to refocus your attention and start making cuts as soon as possible. Remember, it’s better to overreact than underreact.
Forecasting doesn’t have to be super complicated. Set up a new spreadsheet - input your current financial data, set out your baseline (i.e., what you were projecting before), then outline a bad scenario (20% lower, on average, but that’s context dependent), and then a worst case (40% lower, on average). Do you have enough money to make it through the next 12 months?
We can work with a short runway. These tips aren’t only applicable to businesses short on cash flow but they’re especially relevant to those.
#1. Shore up your mechanical churn, says Patrick Campbell from Profitwell. Consider focusing on longer term subscriptions to extend your runway.
That means potentially offering discounts on yearly subscriptions, or bundling together additional features to increase cash flow. Don’t just focus on monthly subscriptions - make it easy for consumers to upgrade by sending friendly emails or in-app notifications.
#2. Refocus your marketing efforts on resilient industries. Some industries are definitely weathering the storm better than others - travel is down, but interest in online workouts and food delivery are up.
Use data to identify what the resilient industries in your addressable market are and focus on outreach to them. Signum.ai can help you to keep a pulse on the market so you know how and when to pivot.
#3. Make budget cuts. It sucks but that needs to happen pretty much now if you don’t have enough runway. Get out of low CAC/LTV channels.
Get rid of things that would be “nice to have” because right now, you should be thinking like you’re a lean startup on day 1. Everything you thought you knew is no longer true and you’re running out of capital. Fast.
If you’ve got some breathing room, good for you! Here’s a reminder for you that spikes are temporary but negative trends are probably here to stay, so don’t get too complacent - your long-term strategy definitely still matters.
#1. One thing you can do if you’ve got a long runway is focus on gaining market share. That means buying out contracts within bleeding industries and going after portfolios of competitors with cash flow issues. Guillaume Cabane, Growth Advisor at G2, talks about offering his software for free to competitors’ clients to help them reduce costs. His only cost is onboarding, since it’s software, and even though his MMR is 0, it’s allowing him to build trust in these people by helping them in times of need.
#2. Move fast and hold the frontline accountable. Just because you’re not scrambling to raise capital doesn’t mean you shouldn’t be taking action. That means going back to the drawing board with a cross-functional team and taking a few hours (if you’re a small business) or days (if you’re a large company) to hammer out your long-term strategy.
Make sure your sales team understands that their job is to act as advisor and consultant to your customers. Teach them to empathize, to ask open-ended questions to see where their priorities are, and, if your value proposition isn’t going to help them, to recommend them to someone who can.
#3. Think about what you can create now that will benefit you in the future. Right now, you have the amazing opportunity to hire top tier talent, whether that’s an engineer in San Francisco or high quality freelancers.
Build out features customers have been asking for so that customers who can’t afford to pay for your services right now will have a reason to come back. If you can’t ship product, build internal tools to make your business more lean and efficient in the long run.
#1. You need to rethink your value proposition and how you’re positioning yourself. The market has changed and data shows that buyer affinity has shifted from propositions focused on making money to those focused on saving money.
The same goes for your ideal customer profile - reflect and pivot on it to make sure it still makes sense in the context of the world. Is your CVP a nice-to-have or a must-have?
#2. Redo the playbook. Test what works best now, whether that’s cold calls or digital marketing, because all your previous data is worthless now.
Go through all marketing and sales material to ensure it works with the current context of the world - no one is chilling on a beach right now, so don’t run Facebook ads with pictures of people suntanning. Your outreach needs to be in line with your customers’ reality.
#3. Really get to know your customers. Record as many sales calls as you possibly can. Mark Roberge, Managing Director at Stage 2 Capital recommends engaging in film review multiple times a day to see how your buyers are responding.
If you don’t understand your customer base, you can’t provide value to them. Focus on underlying motives and behavior changes. Signum.ai can be a great resource for that - it tracks everything that's affecting your market and customer behaviour and enables your sales and marketing teams with real-time, actionable insights to help you build a targeted marketing and sales plan.
#4. Retention is key. Churn is a lagging indicator so this point is really important. Engage in reactivation strategies if you see underlying indicators of churn - if you have a freemium product, consider building out delayed pauses so that users can temporarily suspend their subscriptions.
Bundle together features, run first year promos and aggressive annual discounts to make sure you leave this period with as many paying users and potential leads as possible.
⚡These are stressful times, but remember, we’re all in this together. Stay positive – it’s going to be okay!
If you’re curious and want to learn more about Signum, you can check it out here.
Signum.ai helps companies fuel their growth and revenue by automating marketing, sales and market analysis with the power of AI and predictive data.