Let’s address the elephant in the room.
The market has changed multiple gears within a matter of days and weeks. In these times of unexpected change, we are having many discussions with startup founders across the enterprise/SaaS landscape on how to think about their business moving forward.
Doing nothing and overreacting are both risky.
Here are some thoughts on how to survive+thrive through this time:
- Business customers will not stop buying software. Sales deals will take longer. The next couple of quarters will be slow. But, products that address a pressing need & have a clear near-term ROI will continue to see uptake. Find that nucleus of your product that has the clearest short term RoI for your customers
- A different aspect of your product may appeal to customers now. Focus segments may need to change temporarily. Your value proposition and pitch may need to morph. E.g. Talview, which has a product for faster, intelligent hiring is seeing a spike in inquiries as companies look to run more of their hiring processes remotely
- Make sure you have over 12 months of runway (at a minimum). Unless you have under 6 months of runway, there isn’t a need to start cutting costs indiscriminately. Move to annual or multi-year customer billing in case you are not doing so already. Incentivize your customers to pay upfront for at least an annual contract, and multiple years where you can. Focus on collecting receivables in a more timely manner. Depending on the stage of your business, getting or increasing credit lines might make sense
- Prioritize internal investment into areas with near-term RoI. Re-evaluate your operating plan. The relative efficacy of your sales and market channels will change significantly. Now is a good time to take stock and reallocate resources
- Evaluate which deals in your sales funnel are likely to close faster and which customer segments have both a) a more pronounced pain point, and b) lower disruption to their business from the current situation. Larger deals that require multiple meetings and many decision-makers to buy in are likely to take even longer than usual. Some customer verticals that are seeing a massive drop in their business will likely freeze up on most new investments for some time (e.g. travel, energy); some others will get back closer to business-as-usual in a few months; and a few verticals might see accelerating needs (e.g. companies in pharma, remote work, delivery, at-home entertainment)
- Bottom-up sales motion with strong land-and-expand has been steadily becoming a viable path to enterprise deals in recent years. This may now accelerate. Think about your freemium and bottom-up strategy, and focus on building usage of your product in segments where closing big-ticket deals may be hard in the near term
- Some major sources of your leads have temporarily evaporated e.g. events and conferences. But this also applies to your competitors. The resourceful and creative will win here. Now maybe a good time to lean in on customer referrals and to double down on expanding deployments with happy existing customers
- Those who are able to perfect their GTM for a remote-first world would be well-served. The line between inside sales and field sales has been moving out steadily in recent years, and this will accelerate that shift significantly
- If the ability to build and operate in remote teams was a strength in 2019, then it is a superpower now
- Scrappy, capital-efficient cos can now reclaim the deserved upper hand over high-burn competitors
- The talent market has been incredibly competitive in recent years, but that will change in this new economic reality. In a few months, if you are doing things right, you may be able to hire the kind of rockstars that felt out of reach for your business till recently
- If you are raising a round now, then raise more $ if you are in a position to do so. Higher dilution is okay
- VCs are sitting on record dry powder. Good investors will continue to invest and great startups will continue to have financing options throughout this period
Above all, stay safe and keep building.