Founders Guide to Surviving in Tough Markets
This market we’re in is anything but stable. It seems like we went from “growth at any cost” to “efficient growth” at any cost, and it’s got me thinking…
What goes up does come down, but how far down have we really come?
With so many feeling the pain in tech, it’s important to take a breath and think about why. The market was frothy, we trained a lot of people to be “one-trick ponies,” and the expectations and outcomes weren’t sustainable. It was bound to correct sooner or later. And here we are.
I want to be clear on something: there’s a BIG difference between validation and correction. And even though it may be tempting because it’s the soup du jour, you don’t have to course-correct what isn’t broken.
Just because you may be swarmed with messages about cutting back, stop, think, breathe, and take a hard look.
Revenue and retention solve all problems. Your business speaks the loudest. It’s critical to measure what matters to stay the course to show up for your market, buyers, customers, and team.
The one constant thing is change. How can you use the forces the market is throwing at you to your advantage? Nassim Taleb wrote a book called ‘Antifragile’ that speaks to the core of this idea.
If you put something fragile in a box and shake it, it’ll break.
If you put something strong in a box and shake it, it’ll stay intact.
If you put something anti-fragile in a box and shake it, it’ll get stronger.
This is a stress test for your business. And history has shown us that through every difficult time, there are longer periods of growth and expansion. Those that power through difficult times are those that:
- Capitalize on their opportunities
- Ensure the right people are in the right roles doing the right work consistently
- Have an excellent leadership team, or use this as an opportunity to “top grade.” If you don’t have outstanding leaders, it will be hard to realize outstanding outcomes. If you don’t know what excellent leadership looks like or how to find it, it’s time to get help. I can help you, and my hotline is always on (insert shameless plug).
- Obsess over their customers
- Remove friction from the buying process
- Invest in their team through training and support
How can you use this opportunity to grow and innovate so that when things shift, you’ll be poised to flourish like never before?
This is when great leadership emerges, and businesses are made. Here’s what you can do to rise up to the challenge.
Avoid an extreme mindset.
Growth at any cost, efficient growth at any cost, FOMO, fear-based indecision… these ultimately hold your business back.
If that’s all you’re benchmarking to check the “success” box, then you’re missing the bigger picture.
Instead of relying on funding to keep the momentum going, waiting for that perfect person to arrive, fooling yourself into thinking big hires to propel your business forward are on the back-burner, making deep cuts that will set you back, mute the noise and double down on what really matters and drives a business forward: alignment, your people, customers, profitability, sustainability, responsible growth, and retention.
And know what got you here will most likely not get you to the next big milestone.
Money is helpful, but it doesn’t fix what’s broken if you’re core is rotten. You’ll just throw good money after bad if you don’t address the root of the problem.
There’s no time like the present to hone in on what will drive sustainability over the long term… for your business. Not trying to keep up with everyone else’s.
What to focus on now
For starters, it’s an excellent time to re-evaluate what growth means for your business.
Just because something worked great in a bull market doesn’t mean it will translate to a down market. That’s why you must take an intentional, honest hard look at your company to understand what path you need to take to keep your eye on the prize for:
- Effective GTM strategy
- Frictionless buyer journey
- New, old, and existing customers (remember, there’s a goldmine in the graveyard)
- Retention (team and customers)
- Churn (team and customers)
It comes down to 3 simple (but not easy things):
This will take iterations to get right. So don’t assume that you’ve got it all figured out just because a bit of success comes your way. More than ever, keep your finger on the pulse and double down on your strengths, understand your weaknesses, solve your gaps, pinpoint your opportunities, don’t ignore your threats, and be ready to adapt.
Before you jump to follow the leader to lay people off, measure what matters for YOUR startup. Just because poorly run, over-leveraged startups are facing the end of the party, this doesn’t mean you are.
Don’t forget to take inventory of your company resources. Economic downturns typically mean resource scarcity. You want to ensure your resources are maximized and being spent in meaningful ways that can provide a demonstrable ROI. Now isn’t the time for high-risk experimentation or underutilization.
Leading through uncertainty
Economic downturns are challenging for everyone on your team. Your leadership is the bedrock people can rely on when times are tough.
Josh Kopelman of First Round Management said it well, “It’s a founder’s job to balance transparency and hope.”
You have to be honest and realistic with your team. Otherwise, you risk losing credibility and trust with your team, which could be devastating long term.
Remember: it’s perfectly OK to voice what you’re concerned about, ask for help, or say that you don’t have all the answers.
Managing expectations early and often, sharing your hopeful image for the future, and backing your words up with meaningful action with your team will help keep everyone motivated and optimistic.
One of the silent benefits of hard times is that they bring people together when alignment is at the core. If you get through this recession with your team, you’ll undoubtedly be closer and stronger than ever. So say what you mean and mean what you say, communicate decisions, provide as much context as you can, and remember you can’t have a business without your people to take care of your buyers and customers.
It’s not all doom and gloom.
Through the darkness, there is always light.
It’s okay to make a mistake, it’s what you do with it to learn not to make it again and get better that matters.
There is a lot of chatter about the doom and gloom, there is a lot of advice (good and bad), and there is no shortage of pressure… especially from your board and investors.
It’s okay if what you’re doing is working and it goes against the grain of what everyone else around you is suggesting.
Remember, someone else’s decision or advice is not yours.
Business isn’t one-sized. Having a filtration system to focus on your “light” to make great decisions (even when they’re hard or unpopular) is half the battle.
When everyone else is zigging, be the one that zags.
Times are tough out there for many founders and businesses. In a world that’s full of noise, sometimes it’s best to keep your head down and simply make progress where you can.
When times get tough, it’s easy to get paralyzed by fear. Instead, focus on what you CAN control… your people, your process, and how you execute to show up internally and externally.
You got this!