Downturn in a start-up

Today when I sit down and ponder upon the situation right away, a lot of thoughts flash through my mind. In this particular blog I'll be talking about my experiences in the past 6 months and my take on how to manage cash through a downturn in your company.

Here are the ten ideas I have thought over and finally penned them down - leaving out the colorful story around them:

1. Build a detailed model of cash flow so you can test every decision against it and it should be so strong so that minor ups and downs might not effect the company.

2. Push out accounts payable as long as you can. This takes a tough accountant or controller.

3. Structure the deals properly keeping all the pricing factor in mind.

4. Don’t destroy your market but do some aggressive deals and atleast maintain a buzz in the market place and carve out a niche for yourself.

5. Spend in sales and maketing to keep the company growing. Maintain a neat website of your company as its the 1st impression people get. Remember it is the face of your company.

6. Manage performance of your employees aggressively. If someone isn’t performing, motivate them, enhance their skills, sit with them and hear them out. Let them work their own way and only replace them if you absolutely have to.

7. Squeeze into your office space. Put off the idea of taking a bigger and a more expensive office space on rent as long as you possibly can.

8. Maintain a good credit value in the market space and use it before you need it. By the time you need it you won’t be able to get it, so get it while you can.

9. Likewise if you need to raise venture capital do it well before you need it, and don’t get greedy on valuation. A successful company makes all its employees comfortable and make sure that there is perfect rotaion of money, don’t risk long term success for valuation or your percentage.

10. If you have to, take the company through a cut in employee welfare and other office expenses. A CEO should cut down his expenses first, cut all bonuses and luxuries, cut all incentives and when you have no choice make your employees realise the critical situation of the company and demand their co-operation to pull the company through. Believers will stick with you, and they are the ones you want.


Written by: Neha Gupta