One of the key learnings I’ve had as a leader who has navigated more than one recession (including launching a start-up in the US literally months before the GFC!) is to be ready and prepared to make decisive moves.
It’s imperative to manage your business closely on a daily basis as the crisis evolves, from both a revenue and cost perspective. It’s hard to manage revenue projections right now, and easier to control costs. What might seem conservative in the short term may look highly prudent in the long term.
It’s therefore important to stress-test your top line, P&L and cash flow. Establish detailed modelling of your markets to estimate how they will develop and to gauge key sensitivities in the P&L. Model different scenarios that will allow you to move quickly. This needs to be an agile model and it must be updated regularly as the situation unfolds.
As a start-up/scale up it’s important to focus on cash management to strengthen liquidity. Financial strategy should aim to preserve cash above all. Build reserves, and postpone CAPEX and OPEX projects. Reduce the burn rate wherever possible. Make decisive but no-regret moves. Running out of cash is still the #1 reason companies go bankrupt – so plan accordingly! Remember great businesses are built in good markets but also in bad markets. In a war of attrition, history rewards the early and decisive actions. It sounds easy, of course it isn’t.
Every leader needs daily – in some cases hourly – updates about the state of the marketplace, the state of operations and the key issues the organisation is facing. The issues register changes constantly. Be ready to “work the problem”” with your teams and use different sources of information to help inform your decisions. It has been great to see how many leaders have written compelling content on how businesses need to think, survive and thrive. This is free advice! The audiences will be your own people, your extended leadership team, customers and business partners. Listen to, and consult with, as many people as you can and act decisively on the information in front of you.
Invest in your people and their welfare, but also reap the savings from cancelled events and travel, reduce marketing to save it for later and delay any one-off costs until you have more certainty. At the same time, look at ways you can redeploy some of your resources. Whilst client activity and projects may soften for a period, this is a great time to get creative with how you innovate; build & focus on R&D on the core things that will drive the biggest inflexion point in the future. At Sypht, we see an opportunity to continue to invest in R&D of our products, accelerating the automation of our platform to enable customers and partners to easily test, evaluate and integrate with our API product through online channels requiring little to no face-to-face interaction.
But at the same time as being more conservative with cost controls, it’s still important to have commercial urgency.
Even in this severe downturn, there are pockets of growth. Where are they? Online? In select customer segments or geographies where there are key value pools for your products? Are some businesses prioritising digital transformation and shifting to cost productivity and looking to remediate their cost situation? Many businesses will still have burning requirements over the next few months, so be ready to help them! Charge and motivate your teams with finding opportunities wherever and however they can.
We are already hearing from some clients that they want to accelerate digital transformation projects. The emotional stress of the emergency and the reality of remote working, though, can make this more challenging. But having a cloud-based API platform enables our clients and partners to work with speed and agility and prove value quickly. We’re able to build custom models for our clients within 3-4 weeks that then allows them to test, evaluate and deliver ROI quickly against specific frictions or use cases. It’s all about making AI simple for our customers during these difficult times – and highlights again the importance of agile technologies that allow organisations to test and prove value through product and technology-led transformation versus the commitment of longer-term strategic digital transformation projects.
Move proactively to seize advantage. It’s not only your sales people who should be looking for pockets of opportunity. Even in difficult times, look for ways to capture market share where you can – whether it’s the result of behavioural changes as customers move online or to new channels, or because conditions allow you to differentiate by moving with more agility versus legacy systems and technologies. We are seeing this at Sypht where some of our US customers are moving to remote working where continuing process inefficiencies will impede their business operations. We are able to address backlogs of manual processing of documentation and reduce them from years to hours, saving significant time, cost and money, managing compliance efficiency and ultimately allowing employees to focus on other key areas. We are in a position to help businesses over the next few months that need to move quickly with cloud-based remote working tools.
Look after your customers. Loyalty isn’t just a matter for your client-facing teams – it’s an imperative for you and your leadership team as well. Your customers are under the same stress you are. If you can help your most loyal customers with solutions that make a difference, you will tighten the bonds once the emergency is over.
Finally, remember to do good. The state of emergency means that all of us – and our organisations – are called upon to do our part for the community at large. Remember your community and try to help. Identify pro-bono opportunities. You will improve your organisation’s skills and enhance its reputation in society. And it’s the right thing to do. It’s been great to see so many leaders post content and set up webinars over the last few weeks, offering key insights into how to navigate this crisis and also the emergence of job exchange platforms for those who have lost their jobs in the crisis. #stepup4stooddown