I was asked by participants on the @IgniteAccelNI event on Friday how founders should respond to the current #CoronaVirus crisis. I don’t think that I’ve anything wildly original to add but, nonetheless, here goes – I’ll at least try to be very specific... 1/13
I’ve been through at least 3 crises, the dotcom crash, 911, 2008. All of those were very different but each one taught me lessons. The experience might be useful to someone. 2/13
1. Communicate, communicate. Your team and investors are worried. They aren’t idiots. They know things are bad and going to get worse. Honest communication is the best antidote to fear. If you don’t have a regular all-hands call, start one. Ditto investor email update. 3/13
2. It goes without saying…follow the guidance of your government and health service. Limit social interaction, work from home where possible, eliminate unnecessary travel. Anything that can go virtual should go virtual. The tools are fantastic now. 4/13
3. In this situation, cash isn’t King, it is God Emperor. Anything you can do spend less or bring in more, you should do and do now. If you are working on a financing or closing a big deal, run, don’t walk to close it. Don’t delay haggling over terms. Time is your enemy. 5/13
4. Do not ramp your burn. You can increase spend but do that only against clear financial metrics, e.g. increase in revenue. Customer buying behaviour will change. Most customers will become more conservative. This is not the time to ramp marketing spend. 6/13
5. Pay cuts are preferable to layoffs. In consultation with your team reduce pay NOW. A 25% pay cut now buys you (and your team) an extra month of runway every three months. If you wait until you are out of cash, it buys you nothing. Consider a generous equity swap. 7/13
6. Show example. Example in accepting a larger pay cut then your staff. Example in working from home. Example in adhering to government and health service guidelines. Be a leader. Your team expect and need that. 8/13
7. Naturally, if there are non-pay savings that you can make, do it now. Talk to your suppliers. Larger suppliers may be prepared to cut you some slack on payment terms. Pay your smaller suppliers. They are suffering too. 9/13
8. Can you accelerate cash into the business? Can you make a VERY generous offer to customers who pay upfront for 1 or more years? Most won’t take it, some might. Once the offer is gross margin positive it’s a win. 10/13
9. Think about how you can help. Is there a vulnerable group or people involved in #CoronaVirus response that would benefit from free access to your product? Can your team make a contribution to the fight? It’s the right thing to do and might win you future customers. 11/13
10. Remember that personal sacrifice doesn't scale. You can't carry this burden on your own. Talk to other founders, mentors, etc. You taking no salary won't buy you much additional runway (but see 6 above). 12/13
Finally, not all businesses are the same. If you are in the fortunate position of virtualising a physical interaction, the same rules may not apply to you and you may have a great opportunity. But make sure you think that through before acting on that basis. Good luck! 13/13
