Serial Entrepreneur Jason Calacanis who recently retired from blogging and started, instead, an email newsletter has always been straight-talker. His candor and quick tongue are traits I find in myself that often, like Jason, get me into trouble. If you subscribe to Jason’s newsletter you certainly received his latest. If not, you can find it here on Alley Insider.
Jason’s email has a “focus on the entrepreneurial and startup depression and economic downturns/depressions–and how you can deal with them.” He suggests that the economic downturns we’re seeing right now will kill 50-80% of startups within the next 18 months, and that entrepreneurs need to be prepared to take certain steps to fortify, but also to monitor and address their own “entrepreneurial depression and anxiety.”
I love this topic. I’ve stated many times on this blog, and otherwise, that one of the biggest defining characteristics of an entrepreneur is his/her perseverence and resiliency. Those characteristics are to an entrepreneur like water to a fish. These are traits that an entrepreneur just requires 100% of the time. Jason states,
“Depending on your DNA, getting your ass kicked is either complete torture or deviantly rewarding. Truth be told, I like getting my ass kicked because it makes me angry, motivated and focused.”
That’s just worded perfectly. You either got it or you don’t folks! I know, for myself, I work best when the chips are down. When I’m in second place, I move into first. When I’m behind in the count, I hit a double. I’ve always been like that. I think most entrepreneurs are wired the same way.
Jason makes some very specific recommendations about things you can do right now to cover your ass. Some of those recommendations are as follows:
1. Execute better: This is fairly simple, as I describe above. Rank
yourself and your performance and improve it.
2. Grow the talent you have: When the market is down, it’s a great
time to get your team educated and to the next level. Invest in
training and education of your top people, because they are the ones
who will lead your company through this mess.
3. Firing the average people: Again, it’s totally politically
incorrect, but I highly recommend firing anyone who is good or
average. Startups are an Olympic sport and every slot on your team is
critical. You wouldn’t put a “good” swimmer in a relay, would you?
Don’t have one in your startup. Fire the good and replace them with
4. Cut spending every where you can: Recurring costs like
connectivity, phones, rent and insurance are things that you can
easily cut. Go to each of your providers and ask for 20% relief
immediately or you’re leaving. Most, not all, will give it to you.
5. Find a revenue stream and ride it: If you don’t have a revenue
stream right now, you’d better find one on Monday. Seriously, by the
end of the day. Once you find this revenue stream, ride it. Put at
least 25% of your effort into bringing in revenue.
6. Focus on your profitable clients: If you have revenue, start
focusing on which clients are most profitable. Take them to lunch and
figure out how you can over-service them and sell them another product
(or more of your current product). You’re gonna want to protect these
accounts because the folks reading Point Five are going to be calling
7. Make your top ten 10% better: Look at the top ten aspects of your
business and come up with a plan to make each 10% better in the next
30 days. Ask everyone in your company to make suggestions for the 10%
better program and execute on the ones that will provide the most bang
for the buck. Sometimes, there are things you can do today that will
make something 10% better for free–you just haven’t brainstormed
8. Hold an optional off-site breakfast meeting on a Sunday and see who
shows up: If folks don’t show up for you to grow/save the company on a
Sunday for a two hour breakfast, they probably aren’t going to step up
when the sh#$%t really hits the fan. You need to know who the real
killers on your team are and you need to get close with them now.
Again, it’s fine to have 9-5ers on your team–if you’re the Post
Office. You can’t have them at a startup company. Note: if you reading
this and saying I’m anti-family, save it. Folks don’t have to work at
startups and some of the hardest working folks I’ve met have families
and figure out how to balance things.
9. Build marketshare: One of the best things to do in the down market
is build marketshare. Look for competitors that are going out of
business and buy them or just “steal” their clients and talent (i.e.
pick them up).
10. Raise money: I know I said above most folks won’t be able to raise
money in the down market, but that’s not because the money isn’t out
there–clearly it is. The issue is that the big money out there
doesn’t want to fund small ideas that are in the death spiral. Build a
plan based on revenue and taking market share and folks will consider
“Inc. magazine reports that a huge percentage of companies in this year’s Inc. 500 were founded within months of 9/11. Talk about uncertain times.
But uncertain times, frozen liquidity, political change and poor astrological forecasts (not to mention chicken entrails) all lead to less competition, more available talent and a do-or-die attitude that causes real change to happen.
If I wasn’t already running my own business, today is the day I’d start one.”
I wholly agree with this and it seems others do too. Many contend that the best time to start a business is now, during a recession.
The Industry Standard gives Five reasons why a recession is a good time to start a company.
With Congress on the verge of approving some sort of bail-out for this financial nightmare, it’s important that people keep their heads on straight and stay focused. Perhaps this is an overly simplistic analogy, but it’s sort of like when the power goes out during a winter storm. You don’t know when the power will come back on, you feel the temperature in your house dropping, the pipes might start to freeze, and your children, your pets, and everything starts to be affected. But that doesn’t mean you light a fire in your house either. You don’t start burning the furniture. You stay calm, you buckle in. You get prepared to ride it out by finding sweaters and doubling up on socks. You fill up jugs of water, you let the ice melt, you light a few candles, but not all of them, you play a board game, keep your spirits high, and take it slow. But you also have a plan.
Now is the time to fortify and strengthen, get better, get mean! Those who panic aren’t thinking and don’t have a plan. So think – have a plan. Have a plan B. But most importantly, stop for minute – recognize the opportunity that’s in front of you! These opportunities don’t come around too often.