SaaS markets sold off hard last week, but more importantly some SaaS businesses are seeing sales slowdowns in this environment. Below is advice we received from three CEO’s who lived through the great recession.
Budget beyond the goal. During World War II, the Allied timeline for success was “V+6” which stands for ‘victory + 6 months’. Your budgeting should be similar; whatever your definition of victory is (perhaps a certain ARR and growth rate by the end of the year), make sure you budget similarly. For SaaS companies, we’d call it V+12 whereby V is the milestone you hope to hit plus 12 months of cash beyond that should you not hit the milestone as planned.
Employees are understanding. Your employees see what’s going on and recognize this is an uncertain environment. As such, they’re happy to have a job, so if you need to make big expense cuts to budgets and even cut salaries across the board (HP was famous for doing an 8% cut across the board instead of laying off a single employee back in the 80’s), employees will understand and it won’t be as poorly received as you may think by those you retain.
Layoff those on the bubble. ‘B’ and ‘C’ players won’t become ‘A’ players in this environment. Let them go now because not only will they be a drag, but there have been many A players that have been laid off. This is an incredible time to upskill your team; there is a lot of hungry talent on the sidelines looking for work so layoff the weaker players and replace them with talent that has been benched.
Product review. Everything on the product roadmap should be up for review. There are no sacred cows in this environment, so if you’ve got projects or new products absorbing a lot of resources, consider pausing them. This is also a great time to really review the product and ask “are we mission critical to our customers?” and “are we focused on solving one really important problem for the customer.” If the answer isn’t certain, it’s time for a pivot. Get close to the customer, figure out what they need, and deliver it. That’s easier said than done and its good advice in any environment, but you’ve got the aircover to kill products and go in new directions.
Survive and then thrive. Do what you need to in order to survive. The survivors will come out of this with far fewer competitors and looking at a lot of pent up demand. You’ll thrive if you can just hold on long enough.
Thank you for your readership. See more blogs and SaaS data at blossomstreetventures.com. Email the author at sammy@blossomstreetventures.com.
Enjoyed this post?
Share it using the links below.