Startups in the genuine sense of the word are all about reinventing industries. You’ll often hear eager entrepreneurs talking about how their product is going to upend the incumbents and change the world. Oracle, Apple, Facebook and Amazon all managed to do this.
But startups don’t just need to reinvent industries, they also have to be prepared to reinvent themselves. Take Apple, for instance. After the dot-com bubble hit the US economy back in 2000, the price of the company’s stocks fell sharply. For a time, it looked like the company might go out of business, especially if it continued to focus on its core PC products. Both Steve Jobs and Steve Wozniak decided that it was time for a change of tack. Instead of Apple focusing on the PC market and competing with Microsoft, it would try to drum up support from new market segments, like mobile music players. Before long, Apple had reinvented itself (again), and the iPod was born.
Apple didn’t do this because it wanted to. It was quite happy merrily going about its business, making regular PCs and laptops. Instead, the company changed because it had to in response to the pressures the financial crisis put on its bottom line. Just like back in 2000, today’s entrepreneurs face similar challenges. We’re now nearly ten years into the current economic expansion, the second longest period of sustained growth in history, meaning that we’re probably due a recession sometime in the next couple of years. Startups, therefore, need to think long and hard now about whether they have the product stack to survive changes in the future market. If not, then the preparation should start today.
According to Make Money in Life, many startups fall at the first hurdle because they don’t plan far enough ahead. They are so focused on their own product and how innovative they are that they fail to adapt to the changing world around them. When recessions hit, they’re toast.
Surviving a crisis as a startup is never easy. But it is possible with the right approach.
Admit You’ve Got A Problem
An important part of managing a crisis is admitting that you’ve got a problem. Gather your team around and spell out in plain English the situation you’re in financially. This helps to make it clear that the startup is on the line and motivates people to make immediate changes.
Create A List Of Small Executable Wins
When a startup is in crisis mode, perhaps because of a recession, it’s important to make sure that the company continues to have victories. In times of crisis, even small wins can have a large impact on morale. Get your team together and make a list of all the things that you think you can achieve under the current economic climate and get them done. Then, celebrate each win and move forward.
Grade Your Capabilities
Lastly, figure out a way to grade your capabilities from zero to ten for a range of things that your company does. This will help you identify problem areas which need to be improved.