If you couldn't attend the webinar or simply want to watch it again, here is the replay.
As the world battles back against the devastating impact of COVID-19, many businesses face growing uncertainty over their future.
With Office Hours, we have called on multiple industry experts to share their own experience and tips for guiding companies through the crisis.
Our second instalment of Office Hours features Steven Schuurman, founder and board member of Elastic and Marili ‘t Hooft, COO of WeTransfer and owner of FF Ventures.
Both call on their past experiences to share effective ways of prolonging your business runway and detail the necessary, yet difficult decisions that come with it.
While no two businesses are the same - there are four essential points applicable to everyone:
- Making swift but measured decisions.
- Be firm, clear and fair with staff - regular communication is vital.
- Prioritising cash flow for survival.
- Refocusing your business plan where needed.
“I personally believe there are a few things you can do wrong when you look at preserving cost. The first is that you wait too long” Steven opens with.
The second point is the scale of such decisions. “You can make a big mistake, that is when you decide to cut, you don’t cut deep enough.”
In most cases, staff expenditure is unfortunately the first method of saving.
“Sometimes it’s real estate, for some organisations, it’s marketing or hosting. For me, it was the staff.”
“We thought, ok, this is going to last years, we’ve got to cut really deep and in 48 hours we fired 25% of our staff”
1 - Handling bad news ☄️
While Steven’s approach may seem cut-throat, those decisions ensure survival. Offering clear reasoning is essential and not just from a business perspective.
“Try to be as humane as you possibly can, realise that you’re being ruthless. Some people get angry, just take it and understand. That’s all you can do.”
“People are smart, they know what’s going on in the environment. The explanation is simple, if we don’t do this, there’s going to be a big price to pay - we’re gambling on the future of the company here.”
Marili stresses the need for clarity. “People will be unsettled in these times. Address that as soon as you can, announce that there will be lay-offs.”
“Don’t beat around the bush, the first sentence in that conversation is ‘I’m sorry I’m going to have to let you go’”
Both agree that when handling cuts, seeking specialist legal advice is definitely worthwhile to protect all involved.
2 - Alternative financing 💰
Putting it simply, Marili says “If you’re faced with these crises and you want to keep your head above water, it’s all about cash flow.”
Realistically that cash flow will need a boost, so alternative financing has to be considered.
This could come in various forms, in fortunate circumstances, bigger businesses may be willing to prepay for work. Talk to suppliers, see if any arrangements can be made there.
Investors could also provide much-needed relief in a time of crisis.
“This is the situation where you start talking to them and see where they can invest more.” Obviously this may mean parting with shares at a cheaper price.
Again, this cannot be the time for waiting around and hoping for the best.
“Come up with a plan, lay it out, tell them what you would need and try and be ahead of the game.”
3 - Dealing with the unknown 👩🏼💻
This situation has no end date, making it near-impossible to formulate a concrete strategy.
“Basically, plan for the worst. I think it’s unwise to assume that in a couple of months we’re going to be fine.” Steven warns.
“If there’s no cash flow, that’s the only thing that should be on your mind” Marili adds.
So how do you move forward? Marili suggests potential refocus. “Try and figure out how this may impact your proposition - what you were doing before, is that still what you should be doing after?”
“Focusing on two or three ideas that might see you through and executing them perfectly, is much better than having 30 ideas and doing half of them.”
Her final point is a more personal one. “Everyone’s sitting at home, as a founder, every week pick three people to just have a chat. Make sure they understand how they’re contributing to the future of the company. Keeping communication at an individual level is a nice gesture.”
Acting fast is make-or-break at this stage, making speedy but measured choices is vital in extending your runway - Ultimately you need to ask, even if this decision seems tough now, could it be the difference in your company existing in three months time?