New Venture Lab: Equipping Christian Entrepreneurs

During the dot com bust when I was flailing to do a 180 degree turn and go from dizzying growth to slashing costs, I created a mantra that we used throughout the organization as a way of helping us focus like a laser beam on becoming profitable.  That same mantra applies to managing a venture during these present uncertain times.  Our mantra was this:

"Don't invest any time or resources doing anything that doesn't either immediately a) grow revenue; b) cut costs; or c) increase customer satisfaction."

The current economic conditions do not lend themselves to longer-term investments for the typical cash-strapped and resource-constrained early-stage venture.  The impact has to be immediate and it has to be fairly certain.  Think of it as a two-by-two grid: if the impact is "high" on the "probability of success" axis and "immediate" on the "timing" axis, then the task or project should be added to the priority list.  Finally, the task or project should further be prioritized based upon the size of the potential impact.

The following article offers additional advice for how to survive our current downturn:

Survival of the Slimmest?

To help your organization survive the downturn, cut costs in your department wherever you can-slash anything that doesn't affect your ability to deliver to customers. At the same time, demonstrate relentless vibrancy to your team-they need to see in you the confidence that you're all going to survive this recession.

Avoid the tendency to get caught up in committees and stagnation. That kills you in tough times. Instead, move swiftly to seize new opportunities and parry threats. And remind your employees that, historically, great fortunes have been built in bad times.

Lately, we've been talking quite a bit about how to survive the downturn. We've offered a range of resources, tips and advice for dealing with the economic crisis at hand. Whether it's the wisdom of Professor Rosabeth Moss Kanter in "Four Actions to Survive the Recession and Emerge Triumphant" or Hernan Saenz's and Darrell Rigby's strong ideas in Winning in Turbulence, we've tried to offer an array of voices speaking to this critical issue.

But often the most effective voices comes from those of you on the front lines dealing with the downturn every minute of every day. I had a chance to hear one of those voices from the podium at a recent Online Publishers Association gathering. His name is Peter Horan, CEO of Goodmail Systems, and he's a jovial entrepreneur who has been working in Silicon Valley since 1977; Horan exudes entrepreneurial zest and happens to have a spate of Silicon Valley wins behind him, having sold three companies in the past five years, including About.com (which the New York Times Company bought for more than $400 million).

Horan isn't all doom and gloom, but he is tenacious. It's his hard-won success--even through the dot-com collapse--that has taught him brutal lessons about growth during the down cycle. Not surprisingly, Horan's mantra is cut costs now. And while there's nothing new about that concept, Horan's no-nonsense lessons paint a stark picture of how tough things have become -- and they also may reflect a zeitgeist of fear and loathing that's gripping CEOs of all stripes.

Here are some of Horan's rules for companies that want to survive the downturn:

1. Survivors are lean, mean and nakedly aggressive. Cost cutting is mandatory. Horan says that he knows he has cut enough of the workforce when he "wakes up with cold sweats because I fear that I won't be able to ship product."
2. Lead from the front. Horan calls the CEO the "Chief Energy Officer" and urges leaders to demonstrate almost relentless vibrancy to the troops. "They need to see in you the confidence that we're going to survive this thing," says Horan.
3. Fail cheap and fail often. This comes with the territory of web start-ups in particular where the need for constant experimentation has become a routine part of business.
4. Communicate and then over-communicate. His analogy here is that when the airplane ride gets bumpy, everyone wants to hear from the captain immediately to know that everything is fine--but buckle up.
5. Flat is NOT the new up. Horan sees the downturn as a time when companies should be stealing market-share and not crouching in a defensive posture by saying that "flat is better than down."
6. Don't just stand there, do something. The tendency, says Horan, is for companies, especially large companies, to get caught up in committees and stagnation. This kills you in tough times - keep pursuing the almighty buck, says Horan. He exhorts a move swiftly approach. Catch your competitors standing still.
7. Great fortunes are built in bad times. This one is a cliché, to be sure, but it's a good one to remember - if nothing else but for a dash of inspiration.

By: Joshua Macht

Source: Harvard Business Publishing