On my personal podcast recently, I shared my take on “the upcoming recession” (spoiler: I don’t think we are in nor will we be in one, and if we do it will be markedly different than any past one and will only be purposeful, not because of an underlying instability AFAIK) and why I don’t think it’ll happen, but I do recognize that the United States is in changing economic times at least for a bit, and the attitude of customers has changed.
Because of that, we entrepreneurs need to change our strategies slightly. It might mean setting our sights on slower growth for a bit, but moreso we need to change how we approach growth and our teams at our companies, if we have teams.
In that spirit, I’ve come up with a few things that we as entrepreneurs should be doing moving forward to account for the changing environment.
Keep your head about you
To start, you’re no good as an entrepreneur and leader if you’re losing your mind. The mark of a strong individual is keeping your wits about you when everyone else is losing their mind.
All the major media channels are doom and gloom. They want you to lose your mind.
But you know your business. You can look at your metrics. You can see what is going on in your space, whether your numbers are going the right or wrong way, whether there has been a shift in deal flow or deal size.
Keep your head about you. Be the person who is dispassionate, who looks at things with a level head and makes decisions from there.
Reassure your team
Next, reassure your team (if you have one). In the past when my businesses have gone the wrong way for time, the team has asked me if their jobs were secure.
In these times, I realized that I had failed to lead. I was portraying the stoic and confident founder, but was forgetting that they were maybe wondering and worrying, and maybe even looking for new jobs because of that uncertainty.
The best thing you can do is be real with them. Talk about cash in the bank and runway, and plans for what happens if that dips too low. Talk about metrics and how they’ve gone (the team should already know this) and the plan to get it back. If you don’t have a plan, ask them for help and work together as a team.
Above all, make sure they know where they stand with the company. You will probably be pleasantly surprised how they pull together.
Show up for your customers and prospects
When the Covid pandemic hit, I went into action for our customers. We did webinars about closing deals, marketing, messaging, and much more.
When the economy is down and things feel uncertain, you can show up for your prospects and customers and show them that you are a sure thing even when times are tough. By doing this and adding more value, you’re setting yourself up for a longer engagement with them and reducing the chances that they churn.
Stack cash – Add more value and raise prices (be indispensable)
This one is probably pretty counter-intuitive, but it works.
The spend that is first to be cut is always discretionary spend. It’s the backup tool that does the same thing as your primary tool, that you’ve been paying for but don’t need to be.
Put another way, the first people laid off at a company when times are tough aren’t the VPs and Senior Directors. It’s the juniors who are cheaper, but easier to replace. You should aim to be thought of as executive-level necessity, not as a junior.
Sell longer deals and continue to earn it
Next up, selling longer deals will help you reduce churn and secure revenue longer term. If your product or service also takes a while to show results, you need to do everything you can to help your customers/clients see those results without letting them quit too early.
Annual deals are great of this, albeit they are a bit harder to sell. Having a set game plan for what they will get for paying in advance, and then delivering on that, wins you a long term customer every time. You can even do “2 months free” sorts of pricing to make it attractive to pay upfront.
Conserve cash – watch your expenses
Finally, we are in a time where profit is cool again and we need to be watching expenses closely so we can conserve cash in order to spend on what’s working well. This is not a time to be investing in a lot of new initiatives that may or may not pan out. Double down on the things that have worked in the past (that you maybe stopped doing because of a new shiny object) or are currently working.
Along with this, go through and see which services or products you’ve been paying for but are no longer using or are “extra.” For example, when the Covid pandemic hit, I was paying for two SEO tools (Semrush and Ahrefs) which do essentially the same thing. I stopped paying for one and saved us $100 per month. I bet, if your business is at any decent scale, you can find $300+ in monthly savings.
Good luck, you can do this!
Navigating a business through tough times is the real test of an entrepreneur. We are not guaranteed smooth seas. In fact, we are guaranteed that the seas will not always be smooth.
The great captains, the ones who come home safe, are the ones who recognize this, accept it, and do it anyways.
I am rooting for you.