First post for the year and its against a backdrop of great uncertainty and fear in financial markets, business world and society in general. The COVID-19 coupled with the oil shock has as of today resulted in a paralyzed, shellshocked West and a winded East. What i have learned going through 2000 tech crash, 2003 SARs and 2008 GFC is that pendulums tend to swing to the extreme aided by self-reinforcing fears and panic. This does not mean that we should be cavalier about things and just work on a best case recovery assumption. Rather it means we recognize this crisis while large is not a world changer in any meaningful way. Yes some governments which are inept may be voted out, some people/companies will go bankrupt and most sadly, some people will die of the virus who could have been saved if we acted differently. But this will not change the world like the way democracy or religion or even the internet/iphone did.
Other Cost - Rent. See if you can make it 2% of your total expenses if you are a pure software play. Do you really need downtown or coworking location? We had about 100 staff in 4500 sqft of space with meeting rooms and storage area and pantry. Be cheaper than us.
Other Cost - Staff welfare expenses. Do you really need to spend more than $200 per staff per year on welfare? A lot of team bonding activities can be free. This is not significant but it is setting the tone.
Cashflow Mgmt - Create packages that collect cash upfront. Chase AR religiously and don't be the bank for your clients.
Talent - top performers should still get recognized, paid well and maybe even get some bonuses and increases. Use the opportunity to remove bad performers.
The above areas are all cost linked. Frequently, my experience is that cutting just helps you become more efficient and a downturn is a good reason to test your efficiency. I honestly feel most startups today behave like an MNC in terms of perks but without the commensurate revenues and profits. What is critical is that you comminicate the reasons for all the changes. This will be a good time to see if your staff trust you and whether you have built a good culture of teamwork and togetherness.
Next is revenue side.
For sales, this is also an opportunity to fire bad paymaster clients and replace them with safer clients in terms of payment terms. Remember honestbee. They can always fold and don't pay. Then you need to write off the AR. That is even more painful and its usually better to not have that revenue in first place.