Especially in times like these, businesses need to focus on fundamentals.
In the "old" days (say 1900s), VCs and angels didn't really exist...so how did those companies grow?
Read on >>
In the "old" days (say 1900s), VCs and angels didn't really exist...so how did those companies grow?
Read on >>
1) First and foremost -- excellent cash management. To the extent possible, defer money out. Bring money in sooner.
Costco is great at this - they sell you a membership upfront. Then you buy stuff & get money from you. They pay their suppliers 90 days later.
Costco is great at this - they sell you a membership upfront. Then you buy stuff & get money from you. They pay their suppliers 90 days later.
2) In fact, w/ this strategy, Costco has largely been able to fund new Costco locations because they get so much cash upfront.
3) In contrast, a lot of ad businesses work in the opposite way & often go bankrupt as a result of the cash flow model.
I.e. pay for ads in publishers today. Collect from advertisers 60 days later. This means you are constantly funding a cash gap even though you are making $
I.e. pay for ads in publishers today. Collect from advertisers 60 days later. This means you are constantly funding a cash gap even though you are making $
4) Let's talk about cash inflows. How can you get more cash TODAY? Charge upfront. Pre-sell your product. Pre-sell memberships. If you have a subscription tool, encourage annual contracts.
Cash is king and you can get creative with moving money today even if you are discounting
Cash is king and you can get creative with moving money today even if you are discounting
5) If your target audience is no longer spending, are there other quick rev sources that are peripheral?
Like virtual events -- can you sell tickets for something related and build your audience / list in the meantime while waiting for your market to come back?
Like virtual events -- can you sell tickets for something related and build your audience / list in the meantime while waiting for your market to come back?
6) Outflows of cash - can you renegotiate w/ all your service providers and suppliers to defer payments?
Can you renegotiate your rent (personal & biz)? Esp in times like these, ppl aren't touring homes / office bldgs in. So you're still the best tenant even if you pay less.
Can you renegotiate your rent (personal & biz)? Esp in times like these, ppl aren't touring homes / office bldgs in. So you're still the best tenant even if you pay less.
7) Employees - if your biz is negatively affected, as unfortunate as it sounds, you'll need to lay ppl off, which is never easy. My biz partner @shiyankoh has thoughts here:
8) For the employees who remain, you want their morale to be solid - try to give them as much stability as you can.
But if you do have folks who would prefer more equity than cash and can volunteer, now would be the time to move them to less cash and more equity.
But if you do have folks who would prefer more equity than cash and can volunteer, now would be the time to move them to less cash and more equity.
9) In times like these, you will have to make difficult decisions and make even more difficult asks of literally everyone.
The good news is that this is how things used to be -- and this is how very good business operators have always done things. And I believe you can do it!
The good news is that this is how things used to be -- and this is how very good business operators have always done things. And I believe you can do it!
