5 Out-of-the-Box Strategies for Growing During a Downturn Take lessons from baseball to guide your business decisions.
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"If the world were perfect, it wouldn't be." —Yogi Berra
In today's environment, entrepreneurs must extend resources longer than would have ever been expected six months ago. In the spirit of baseball and missing being in the crowd, here are five tips to help entrepreneurs meet the curve balls of challenging economies.
1. Execute successfully "inside the box" before you can successfully step out
When a batter assumes a batting stance, both feet must be inside the four-by-six-foot batter's box and entirely on the ground. It's the same for winning entrepreneurs. Successful out-of-the-box thinking is always grounded in business fundamentals — cash management, market validation and company culture.
- Cash management. Whether a startup is bootstrapping or has received investment capital, cash will always be tight. Protect every dollar like it was 10. Hold fixed costs to a minimum. Share services. Lease equipment. Negotiate fees and terms with each service provider and suppliers. Seek trade credit terms. Match milestones to capital. Raise capital for 12 to 24 months of runway.
- Market validation. Building a company that solves a big problem for a big market is your ticket to the game. It must be a problem that customers will pay for, a problem that keeps general managers up at night. Successful solutions save money, make money or give customers a way to do something they couldn't do before.
- Culture. In startups and on baseball teams, every person has an impact on what the culture becomes. The most successful entrepreneurial cultures are based on transparency, trust and tenacity. Build a culture where you can trust people to do the right thing.
2. Things change once the batter starts the swing
As long as some part of each foot is inside the batter's box when the ball is hit, the batter is within the rules. And that's the lesson for entrepreneurs. In challenging times, revisit the fundamentals but be flexible and ready to move.
- Conserve cash. Reevaluate cashflows for six, 12 and 24 months. Freeze all equipment spending. Eliminate variable expenses by line item rather than trying to pare budgets down. What was your company doing yesterday that you can stop doing entirely today? Travel. Technology upgrades. Service agreements. Use laptops and servers for another six months. Expand telecommuting. Get creative with talent. In downturns, internships are often students' only option to gain meaningful work experience and may be your only option to hire. Make friends at the student placement office at local colleges and universities. Today's generation of college students bring remarkable energy and creativity. They are self-starting problem-solvers — just the skills you need when business turns down or up.
- Revalidate your market. As Yogi said, "When you come to a fork in the road, take it." In a downturn, your customers' businesses change. Priorities shift. Layoffs happen. Adversity disrupts inertia. Reassess market opportunities. With a few hours of concentrated effort, a set of thoughtful and well-structured questions and a few hundred dollars, an entrepreneur can develop a survey that will get market feedback in a couple of days. Be prepared to pivot.
- Be guided by your culture's intrinsic values. Downturns demand tough decisions that affect every aspect of the business, from personnel to customer care. Do not pin your hopes on adding new customers or increasing revenue to prevent a reduction in force. If likely scenarios require a reduction in benefits, salaries or headcount, scenario plan immediately. Prioritize actions based on how they affect employees. Eliminate open job requisitions and reduce overtime. Prioritize jobs that have the most impact on your bottom line. If bad news is inevitable, communicate. Rumors create malaise and dread. Be guided by transparency, trust, and tenacity.
3. It ain't over till it's over.
A baseball game ends after nine innings — unless it doesn't. In 2019, about 8 percent of MLB-played games went into extra innings. That may not seem like a lot, but it works out to be about a game a day. There aren't many extra innings for entrepreneurs, but when you are in one, narrow up and prioritize. Every effective team has a cleanup hitter for 11th-hour situations. Who is yours?
4. Remain coachable
Today's typical MLB team has a dozen coaches or more. Entrepreneurs have coaches, too. Tap into the experience of your advisors and board of directors. Alert them to the pressure points in your business plan. Your board is there to provide insight and to serve as a sounding board. If you need help, ask. Be specific. And most of all in challenging times, keep your board and investors informed. Above all remain coachable. Follow Yogi's advice: "Pair up in threes."
5. Cultivate fans
"I want to thank you for making this day/night necessary." While there is gentle debate about the actual wording of this Yogi-ism, there is no question about the sincerity of his heartfelt thanks to his St. Louis fans at a Yogi Berra fan night in June 1947. In entrepreneurship, like baseball, it's all about the fans. Loyal customers, like loyal fans, are the whole reason for being in business.
If you thought you had a customer-centered culture before, become obsessive now. Reach out and personally speak with every customer. Ask them how their business priorities have changed, what new challenges they face, what they are doing to weather the downturn. Be prepared to tell them how you can help.
Guard the bases and take special care of the customers you have. In down economies, gaining new customers is more difficult than usual. It is always more effective to sell to the customers you know than to prospects and leads.
Remember, even if your team is three games back in a wild card chase, keeping your eye on the ball of your business strategy is always the key to growth and survival. It ain't over till it's over.