Seven tips for surviving the downturn

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There's an old joke about a couple lost deep in rural Suffolk. They come across a local, wind down their car window and ask for directions to Cambridge. He thinks, chews on his stalk of wheat, sucks through his teeth and says "Well, if I were going to Cambridge then I wouldn't start from here".

There's been much written on how to survive the recession. Sequoia capital recently told their companies to become cash-flow positive, develop a must-have product and not to rely on raising further capital in the short term. Tim O'Reilly told people to stop throwing sheep.

Excellent advice, but in this blog post I'm going to play the part of the country bumpkin. If you're going to survive this recession, then I say don't start from having no business model, no useful product and no revenue. If you're in that position then, frankly, you're screwed. Sorry.

Instead, this blog post is aimed at software businesses that are fundamentally sound. Businesses with products that people want to buy. Businesses that are sustainable in the long term, but who must first survive the short term.

Here are my seven tips on how to survive the recession:

1) Don't panic. Keep your head when all about you are losing theirs. You've got time - not a lot though - to think things through. So use it.

2) Don't ignore the problem. In Jim Collins's words, you must confront the brutal facts. Think that the recession is not going to effect you because you're too small, or because you're too big? Or because your products are tactical not strategic, or because they're strategic not tactical? Or because you're selling products not services, or services not products? Odds are you're kidding yourself.

3) Communicate with your people. Make it clear you understand the situation. They need to know that you're not whistling blithely as you sail into the storm. They need to know that you have a plan.

4) The bargains can wait. Some people are saying that this is a time to buy companies or technologies at bargain prices. This recession is going to be long, it's going to be deep and it's going to be nasty. There will be better bargains in six months' time. So wait.

5) Watch your customers. How have their priorities changed? Have the buttons you need to push to get them to buy changed? Do you need to change your marketing tactics or the way that you sell?

6) Focus on sales. The statement "My product is so good it sells itself" is even less true now than it was six months ago. Watch this video of Paul Kenny at Business of Software 2008.

7) Letting people go is a last resort. You have an implicit contract with your staff. You give them more than just a salary and a job, and they give you more than just their presence from nine to five. Never say never, but think hard before you break that contract.

What are your tips for surviving as times go bad? Post here ...

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Comments

[Michael Witt]

Too many software companies fail to drive their software from the market. Instead they focus on their ideas of what's "cool" or "new" and in the process they lose track of the fact that people are supposed to buy the software.

Everyone should be asking:
"What reasons have you given customers to buy your software this quarter?"

[Phil Factor]

I've been telling people that the recessions are the best time to focus hard on developing the new killer app. This is because recessions tend to last as long as the development time for a really first-rate product, and you'll be ready for the upturn with a new completed, fully-tested product. Maybe, for software publishers, both sales and development are important. I also think that every time the upturn happens, the mood has changed, and the zeitgeist favors new products. One has to be ready...

[Bob Cramblitt]

This is a time when companies that have deeper relationships with their customers can come to the forefront and build even greater loyalty. What can you do to help your customers through a tough patch? How can you create more value? Where's the pain and how can you help soothe it? If you were ever trying to sell cute, stop it now, and get back to being a partner. Those who don't know how to be a partner can't fake it. Those who know how will be rewarded eventually, especially if they top it off with the killer app that Phil mentions.

[Jason Cohen]

If you haven't started your company yet, or if you just got started, this economy is perfect for you.

For six specific reasons why, and how to take advantage, there's an article up on OnStartups.com.