Doing business in times of economic slowdown

Lesson one: manage your costs.

When the pandemic hit, Zoot was pushing hard to grow faster, and this become unmanageable. This is relatable to many startups who priorities the first years of their development to growing and capturing market share. Think about companies like Facebook and Uber that lose money for many years before they reach profitability.

Lesson two: always have a plan

Do not blindly do things, hope for the best, or even worse, do nothing, and expect the crisis and issues to go away. Always have a measurable and actionable plan with milestones based on relevant metrics!

Lesson three: focus on A players

Matt mentioned in the talks about his strategy for retention. He wanted to keep the senior and most productive people and in the future focused on hiring experience one. This seems contra intuitive when you want to cut costs, but the value such talents provide outmatches the costs. They had focused on building a cutting edge internal system which they offer to their clients and this was possible only because they keep the senior and experienced people in their team. Think about, is your company saving on costs, just to hire many people for a low pay or does it strives for innovation and really invest in the professionals. It is significantly more expensive to hire people, then to keep them.

Lesson four: overcommunicate

When asking the panel how they did manage to keep their people on track with the unpopular changes, including the huge firing, one of the answers was overcommunication. Matt had hosted Q&A every week where the employees could ask questions, including the possibility of asking anonymous questions. What I like in this response is the empathy. As CEOs of their businesses, they must not only know their business very well, but also they must know what to expect from the people who work for them. Not everyone will feel comfortable asking their questions publicly and in time of crisis people usually spread a lot of rumors. That is why it is important to explain over and over again why those rumors or fears are incorrect. Of course, if you try to deceive your employees and what you said initially turns out to be false, this could lead to reputation damage. That is why it is important to explain everything as honestly as possible.

Lesson five: are you number one in your segment?

During economic decline, startups that are at the top of their segment have the highest change to get the needed funding. A few years back, startups could get a lot of money. This trend is gone. Now startups have to work hard and show metrics and convince potential investors that they are worth investing. If you are not number one in your segment, this is significantly decreasing your chances of funding. Focus on your customer and the value you provide and cut all other unnecessary projects to the minimum. If you are unable to reach the top place, then focus on lesson one and plan your startup accordingly. It needs to survive these difficult times. This might mean cutting costs.

Lesson six: use the crisis

Aleks Vladimirov

Solution Engineering Manager at Thales | Senior IT Professional | Startup Mentor and Product Manager

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Entrepreneur, pubic speaker, trainer and coach, who is curious about life. You can check my blog at https://aleksvladimirov.com to find out more about me.

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Aleksandar Vladimirov

Aleksandar Vladimirov

Entrepreneur, pubic speaker, trainer and coach, who is curious about life. You can check my blog at https://aleksvladimirov.com to find out more about me.