It’s official. We’re in a recession. Recessions naturally inject fear and panic, which is only heightened by every discussion of market losses, layoffs, bailouts, and somber predictions. We’re only human after all; of course everything affects us personally and emotionally.
Fear is not a catalyst for productivity however.
With valuable advice pouring in from concerned and sympathetic entrepreneurs and proven leaders, businesses are indeed responding quickly to make decisions that equate to a secure and prosperous future—hopefully.
This constructive advice has helped businesses focus and weigh difficult decisions sooner than they might have without it.
However, over time, productive guidance has mutated into a glut of negative forecasts and grim predictions that pillage precious and vital airtime from contributing to the resolution of our financial predicament. Simply said, fear, and the dissemination of distress, slowly erodes hope, vision, and ambition, ultimately killing businesses instead of guiding them.
Fear inspires desperate actions. Hope (combined with clarity and inventiveness galvanizes action and engenders opportunities.
Opportunity vs. Emotion
These are emotionally charged times which only fuel emotionally-driven decisions. Unfortunately, the advice shared from many experts now and in the past is subjected to both literal and open interpretation, and thus guiding or misguiding the next steps of established businesses and emerging startups.
Don’t worry about getting ahead, instead, just survive…Cutting deeper and quicker is the formula to survive. – Sequoia Capital
There’s a distinct difference between mere survival and succeeding in real world business. Many companies may unwittingly lock themselves in an isolated panic room instead of taking strategic steps to evolve and grow the business opportunity that exists today.
General advice is just that, general. One prevailing set of strategies and recommendations doesn’t apply to all.
In a conversation with veteran CEO and financier Steve Larsen, currently co-founder of Krugle, he advises:
Of course, don’t be stupid. Have enough cash to run your business, but I think the doom and gloom crowd are getting too much airtime. Look for opportunities. Difficult times are when they’ll most likely occur. When we’re at ‘steady state’ and things are normal, good opportunities are much harder to find with GREAT opportunities nearly impossible. It is during periods of tumult and transition when you can spot things that lead to the greatest returns—if you are alert. So be alert.
In every recession, abundant opportunities are inherently rife. To simply believe that this is a generic time to step off of the playing field to warm benches or take a seat in the spectator bleachers in the hopes of emerging once again to readily have a shot at winning the game is illogical. Businesses, and customers, do not stop making decisions—they’re just more discerning during volatile economic climates. But make no mistake, if you choose to stop vying for customer attention, the world will move ahead without you.
This is your time to vault in front of your competition, to earn rapid and sweeping visibility, for a fraction of the time and money that was required to excel during the “good days.”
Your rivals are retreating right now, so what are you going to do about it?
Chinese military strategist Sun Tzu advised in The Art of War:
When weak, feign strength…Attack him [your enemy] where he is unprepared, appear where you are not expected.
Whoever inspires you, remember, tomorrow’s leaders are born, tested, and proven, today. This is your moment.
Development vs. Revenue Generation
As a startup, you are now, officially, on your own. You can’t count on your VCs saving you or some magical offer from Yahoo or Google showing up to bail you out. — Jason Calacanis
If your company is guided by a board of advisors or group of investors that are not actively in tune with the real world opportunities and hurdles of your business, then their advice and direction may be questionable. Either they’re investing in the development of a product/service or they’re investing in the development of a commercial business or acquisition opportunity.
Depending on goals and milestones, there’s a stark difference in not only how the company is run, but also how its leaders assess and implement critical cost-cutting measures or where additional investment may be required. And, if users or customers are involved, the process of cost cutting isn’t necessarily a sweeping solution.
If resources are dedicated to research and development, assess the state of progress coupled with the runway of current cash and expectations. The key question is, “how can you get from here to there with less than what you’ve already been spending or planned on spending this year?”
For those companies who rely on customers to market products and either hit profitability or simply attain proof of concept through adoption, customers are not expendable. Cutting or freezing any program that connects your solution to your customers is dangerous and requires careful consideration. This IS the time when businesses must invest in the transcendence from survival to market leadership. This recession is temporary, but business is constant.
Do Not eliminate marketing or sales efforts. Okay, I’m biased here, but cutting marketing and sales has a direct and reverberating impact on future income, so don’t be surprised if next quarter’s numbers are down. Without support, sales will continue to trend downward.
Be wise as you evaluate your sales and marketing efforts. With the right team, you may want to consider maintaining or increasing financial support in order to excel while your competition retreats.
Do create an innovative and cost efficient formula for running a concentrated, sustained, and proactive outbound marketing program that effectively creates a bridge between your core customer’s needs and your product.
While companies are cutting costs to extend their runways, consumers and businesses are reducing spending in parallel. However, it’s important to remember that customers are not freezing spending altogether. They are and will continue to research, invest and procure the solutions, services, and products that will help them succeed, offer entertainment, or streamline aspects of their day-to-day workflow. And, they’ll also continue to make impulse decisions just for the hell of it.
Building Your Business in a Recession
Obviously, capital preservation and cost cutting do not equate to sustenance or growth. The driving factors are poles apart when striving to merely stay alive vs. building a business.
If you’re sheltering cash to focus on development, then cut the services and expenses that will not impede your ability to cross the threshold to market success. If you’re conserving funds to prolong life, then realize that the only fountain of youth is cash itself. Focusing energies on generating revenue, increasing visibility, and enhancing customer loyalty are the most effective strategies for underwriting longevity, and hopefully growth, especially during an economic downturn.
The real question you have to ask yourself is, “How will my customers find me today and tomorrow?”
I’m not sure if this is a newsflash or not, but customers do not typically go out of their way to “discover” your products and companies. They have choices and it’s the job of any marketing and sales-centric business to reach their customers where they go for information—otherwise, they’re out of the decision making process by default. Marketing and sales are the conduits for connecting prospects to your business.
In a down economy, tomorrow’s leaders are born today. It takes vision, focus, and a hyper-connected sense of what customers are seeking, why, and where.
The reality is that there are hard costs tied to customer acquisition and retention. The key is to observe and listen to your customers to ascertain the most active and direct channels to reach and engage them.
Here are several, targeted and affordable suggestions:
1. SEO – Customers actively use search engines to find relevant solutions. Keyword and organic search optimization is an inexpensive and effective means for gaining strategic presence.
2. Blog Relations – It’s not just about news and pitching the A-List, creating a consistent and visible brand requires the inclusion of the authoritative, peer-to-peer blogs that your customers and influencers read for information, help and perspective. Oh, and be wise about using embargoes.
3. Media/Analysts – Reporters and analysts cover your space and by simply writing about your company or product, they can position you as an option among your customers; especially when they’re researching options to validate decisions.
4. Direct Sales – Some of the most successful companies right now are concentrating on direct outreach to the decision makers instead of hoping to influence them from the sidelines.
5. CRM – Building a customer-focused business saves money and increases revenue. Focusing on customers and empowering them improves business processes, product development, and also offsets marketing expenses as “involved and participatory” customers transform from a cost-center into an active surrogate sales force.
6. Participate – Social networks are much more than mere time killers. Participating across the social communities where you’re customers and prospects are active and vocal provides a looking glass into their thoughts, requests, opinions, dislikes, and recommendations. It also provides you with priceless opportunities to combat negative perceptions while also positioning your company as a resource.
7. Thought Leadership – One of the best ways to demonstrate thought leadership is to actively share your thoughts where they count. Contributing articles and posts to industry publications, forums, and blogs increases visibility and unobtrusively contributes to your sales strategy by helping customers find you.
8. Blog and Blog Comments – It may seem trite or perhaps even worthless, but I can guarantee that finding the time to host and contribute to a blog that demonstrates the expertise of you and your team is priceless. People are looking for information and direction, not just from your blog but others as well. Go where they are and offer counsel, contribute to the dialogue and establish trust and authority in the process. Why wouldn’t you position yourself as a resource for your customers or prospects? Too busy you say? Empower your staff. Contract outside experts to contribute to creating a one-stop-shop for insight and direction—just be transparent about their involvement. It costs less than you think to build a community around your product, or at least what it stands for.
9. Network in the real world – Participation isn’t solely relegated to online networks. Opportunities to meet and cultivate relationships in the real world are abundant. Meetups, industry events, groups, unofficial lobbycons associated with your favorite events are continuous and more valuable with your involvement.
10. Involve Your Community – Save money and time by involving your customers in the development process of your new and iterative products as well as your go to market strategy. Alpha customers are often ready to assist with the validation of your business model and also the honest feedback associated with your product benefits and features.
11. Websites are not Just Web Pages – Your Website must make an emotional connection with visitors, while also conveying stories and value propositions that specifically capture the attention of your customers – otherwise, all of your hard work and investment of time and money in sales and marketing campaigns will generate traffic, but lead to a dramatically reduced conversation ratios.
12. Innovate – Always learn and improve everything in order to stay relevant.
Buy When No One Is Buying
If it ain’t broken, don’t fix it, is the surest path to obsolescence. Equally, swinging the axe without accuracy and grace will also send you packing. Constraint forces and inspires creativity. Operate not from fear, but from vision, determination, and ingenuity.
In a down market, generally speaking, this is the time to strategically cut dispensable expenses, but also invest in growth. It may appear as common practice, however, current actions demonstrate counter intuitiveness. You sell when people are buying, not when people are selling. You buy when no one is buying, not when everyone is frantically bidding the price up. These are indeed the times to invest in the success of your business and your personal brand.
Remember, the economy is a yo-yo on an escalator. It might go up and down, and down some more, but eventually, it’s always going up (once we fix it, this time).
Any company that intentionally pulls itself from the radar screens of potential and existing customers will find itself on a direct path to the Deadpool.
It is during these most difficult times when character is truly tested and defined.
To paraphrase Al Pacino from Any Given Sunday, the inches we need to be successful right now are everywhere, and it’s up to us, and only us, to fight for them. And when we add up those inches, it will make the difference between winning and losing. Find and keep the people who will fight for those inches with you. That’s a team. Either you win as a team or you all lose as individuals. But fear will not help you win at all.
Excellent article with lot of tips on how to sustain this downfall, i hope the layoffs tracker is not increased more in the coming semester.
I agree. The suggestions are helpful.
Thanks for information
__________________________
http://tinyurl.com/4rdhmc
I have to agree with pretty much everything in this article… now is the opportunity for start-ups to jump into the markets when the big guys are hurting due to their overhead. I also refuse to participate in this recession fad… things have never been busier here for us and they are spiking only upwards!
Jon
http://WoodMarvels.com – Create Unique Memories
Yeah?! Well you got a job you can offer me?
internet innovation kills tech jobs and online opportunities for startups.
KillerLocator.com – easy prey
I think internet innovate creates opportunities for startups. And in this economy, startups – which often have less overhead – can afford to charge less and can often develop products on a quicker timeline because their company is much leaner… This recession will definitely trim the fat and leave us with the best… It’s a ’survival of the fitest’.
There are still a lot of opportunities out there, start-ups or no start-ups, it all lies in how much both the employer and employee is willing to think out of the box.
This is a great article btw.
Yasser
http://www.jobstaxi.com
I dare any of you to even try to live your lives the way I try to! Life is too short to be ordinary.. Do something meaningful or go the F home! Stop living to fatten your bottom line and be extraordinary no matter the cost! As far as im concerned, i died for all of you and the least you could do is understand that none of this shit really matters.. Get over it already!
Peace, JC
Brian, excellent advice and very well said. I’d add that opportunities exist particularly for companies who understand the power of the web as a platform; while the overall ecomony is a mess, we’re still in the middle of a very generative cycle on the web, and lots of companies are going to continue to invest even during the downturn, because they know they’ll lose their place in the ecosystem if they scale back. Look at what all the major tech companies are doing in cloud computing. Think also about the potential of Web 2.0 companies to help re-invent government. So many functions of our society need to be rebuilt, and who better to rebuild them than the innovators in this market? The last crash was caused by a tech bubble; this time, tech isn’t the problem, it’s the solution. The smart money will realize we have to innovate our way out of this mess, and will get down to work.
Exactly! thanks, Jennifer. I agree and second your thoughts completely; tech is the solution, and thanks gods now we have rational leadership coming to the white house to tackle the current mess with science and technologies. Good post! thank you Brian.
A valuable read.
I like the quote from Calacanis.
“Unfortunately, it is a documentary and not a drama.” – Calacanis
-Alice
kindleist.com
Nicely done Brian. I like the Chinese military strategist quote best.
Great post Brain. This itself can work as a ready reckoner for companies to start off in such times.
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Sampad
Psst! Brian of course..
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Sampad
A surprising amount of content – very high quality content, at that.
As we progress further in these economic conditions, words like these will hopefully serve as a reminder that good businesses that react intelligently can find a way to prosper.
Great work.
good
work
All the truth in the world won’t save us from ourselves.
Thanks for this perspective.
It’s all too easy to join the crown and gripe & grumble about (fill in the blank) and forget that we can and must be a part of the solution.
This post is applicable to more than just business.
Thanks for this much needed informative article. This is a great time for bootstrapping startups to make a name for themselves. Komverse? Jan 2009
I like the person who when asked about a recession, answered ‘I just refuse to participate’. To a large degree that is the attitude you have to take. Maybe you can’t avoid the effects of a recession any more then you can control who is the next president, but you can avoid letting the things that are going on around you cause fear and paralysis It’s a choice.
Thanks Brian, entrepreneurs should face recession
As a VP of offshore outsourcing company that primarily works with startups I can comment on how the landscape is changing from my ‘outsourcing’ prospective:
- We do not see much of decrease in usage of our cost-effective services (obviously we lost several customers who relied on VC’s money with no real business model yet established);
- We see an increased pool of new customers knocking the door and asking about our services. Some of them never considered outsourcing before. Now it’s an affordable solution to continue the development (at least part) and thus keep on track;
- There is increasing number of quotes for SEO and Social Marketing. We do not invest a lot in our own marketing of SEO services but reached solid TOP10 rankings for a bunch of web sites/industries, so the business owners or managers are literally suggesting their associates about using SEO b/c it drives healthy traffic. My take is that a lot of startup owners/advisers are considering measurable cost-effective marketing.
I appreciate reads like this, but they are mostly bullshit. The fact is, the guys who won in the last round got lucky, and their luck has almost run out. The guys who will win in the next round will get lucky as well. Sure, there is a right and wrong way to run your business, but the suggestions offered in the article are so obvious that there is no need to print them. All this rah rah rah … it’s just ridiculous.
I agree. This post would fit better on a popular magazine or a blog for homemakers… not for the serious entrepreneurs reading TC.
Maybe this would be useful advice for the very young that is contemplating starting a company –there are thousands out there dreaming of another Facebook, Google, etc., and having no clue, yet, on how to do it.
Otherwise, it is, really, useless pontificating –Quoting Al Pacino? Give me a break!
You should really lighten up, maybe this will help:
http://icanhascheezburger.com/2007/07/19/i-are-serious-cat/
I wear 13’s if you think u can hang?!
“Fear is not a catalyst for productivity however”
except in dictatorships. and China.
Steve, fear is a strong incentive to get people off their asses and DO something, call people, ask for advice, network, etc., in order to save their businesses.
IMO, if your a web startup marketing and sales people are the first to go. This article sounds like a guy begging for his job to me.
The article is very useful and informative.
Yes I agree that direst sales are a great way of going out and grabbing some business. You are also right that companies have not stopped spending altogether. However they have got much better at saying ‘sorry all our budgets are frozen’. It is vital to push back on this as it is seldom totally true they must be buying something.
Chris Kaday
Business coach
http://www.chriskaday.co.uk
The article reads like a tech writer who has never started up a business of his own, and its a bit too “cheerleaderish” for me. As an entrepreneur who’s operating a start-up in this environment, we are focused on one thing: cashflow. I will say it again: cashflow! Either, you have VC money you can live on (and buy you time until you figured out how to many money to offset your expenses) and/or you already have an existing revenue model that drives or is beginning to drive cashflow to sustain the business. The quotes are pretty worthless and something that reads like a fcuking fortune cookie. Worthless. Dispense candid advice, not this BS. From reading the other comments, it appears most of them are from people who have never started up a company of their own.
Well said. I was gonna’ add a comment at the bottom, but seems more appropriate here, that I’ve found as the secret of business success:
1. Produce something that somebody else wants
2. Charge them more for it than it costs to make
At the end of the day if you’re still relying on your venture capital you need to either a) increase prices, b) decrease costs, or c) shut down. Unless you have something quantifiable and specific you’re waiting for — like approval of a new drug — you’re wasting your money, your time, and artificially jacking up the prices of goods and services to us who have real businesses.
Finally, words from TRUE entrepreneurs!
This post is, sorry, worthless. Brian seems to be writing for himself. And a few teenagers our there with zero experience…
Huh? If this article was useless, I highly doubt I would be reading it on Techcrunch. Yeah, I know all of this stuff, but its good to read every now and then. Again if you can take one good thing from an article and run with it… then good for you. Obviously there are people on here that got something out of this. I have read a couple comments trashing this post, but where are your links to offering something better. Where?
People are quick to trash, but offer nothing in return.
Sure, there are good things about this post, but only for those –like yourself, who are starting out and have no *REAL* experience, only “concepts” or “ideas” hoping to get some VC money to start a *web site*
Many of the of TC readers are seasoned entrepreneurs with lots of real experience and the scars to show for it –Obviously you are not one of us, just a wannabe shooting his mouth. Get lost.
Louis, I like you! Alot!
9 out of 10 start ups fail. So many of these same seasoned entrepreneurs you mention with scars to prove it have failed. We supposedly had these same seasoned professionals in the White House for 8 years and on Wall Street. Anyway, I am a bootstrapped start up who doesn’t plan to go the VC route. My ideas are no longer in the concept/idea stage; they are in the implementation stage. Furthermore, most readers had positive comments. So I guess most reader’s on TC don’t have *REAL* experience. So again I ask, are you going to offer us wannabe’s something or I you going to continue to offer nothing. Cuz I am lost here
I agree with the writer 100%. I myself quit my job a month back when it appeared to me that management would cut support to sales and look for fall guys. A lot of people questioned my judgement for quitting in the middle of a recession. Since then, I am writing 3 blogs, 2 of which are doing extremely well in readership, have been offered a place in a masters programme which may lead to a clean energy industry position, and am involved in one definitive startup; there are 3 jobs on offer as well. Without beating my own drum, I can say that opportunities come knocking at your door even during the hardest times. That said, this is no consolation to the many who have no options. It also does not take away the anxiety and pain you go through- I went through a severe phase myself. There will be entrenched people who will buy time for themselves by shedding the good with the bad. But I always say intellect and hard work are valued, and being austere during good times helps you tide over the bad. You do need some luck as well. Fortune favours the brave.
I’ll add to that: Talent creates its own opportunity.
Great article !
Realy cool compilation.
Sunita
Nice article Brian! Well done.
Another one…”Good times makes millionaires, bad times makes billionaires”
Now where did I read that quote before
Nice & very encouraging. Kudos TC.
I admit to not reading the whole article. The reason, for that is I got “hung up” on the interpretation of fear.
“Mother nature” gave us the ability to fear for a reason. When threats happen, fear helps drive us to action that may remove that fear.
Fear motivates. It may not help us make a gain but it could help us avoid a loss. And that’s what motivation is all about.
There is good fear. And there is bad fear.
Fear that derives from a government being in denial of an economic meltdown while trying to hide the fact – is bad fear. That could generate fear of the problem, whatever it is, and fear of those who are charged with solving the problem. That could lead to “uncontrolled” fear.
And those affected – circle the wagons.
I keep hearing people say “Flat is the New UP”. BS. Flat is flat.
While companies need to be very attentive of every penny during these tough economic times, entrepreneurs by nature want to grow their businesses. To feed them this line of bull that flat is good will undermine everything in their nature.
Companies need to be creative and aggressive while not pretending that things are okay in the economy. Up is still the New Up.
wow this is cool and I am now sure that my limo hire business will survive this downturn
Right on Brian. Well done. Fantastic quotes, too.
Recession will also help companies be more efficient and productive, get more things done with fewer resources.
Excellent post, Brian! The 12 suggestions are right on. The quote by Sun Tzu is very appropriate as well.
I personally find peace in my faith. (I know there are agnostics/atheists on this site, please respect my 1st amendment right to religion, which comes before free speech)
The Bible says: “Are not two sparrows sold for a penny? Yet not one of them will fall to the ground apart from the will of the Father… So don’t be afraid; you are worth more than many sparrows.”
I’ve always been taken care of, good times or bad.
I’m going to come out of this recession with increased market share by giving people a better product at a better price. Adversity only makes my will to compete stonger!
Richard