I just wanted to follow up on the article i wrote yesterday with some more thoughts on what property portal sites should do in the current financial crisis.
I came across a presentation from Sequoia Capita on startups and the economic downturn. The key messages are similar to the ones i wrote in the previous article however they have gone into more depth and i thought i would summarise them here for everyone.
Here are the key messages:
- The recovery will be long – dont expect a quick turn around
- There are new realities – raising money on high speculative valuations is a thing of the past and series B and C funding will be very very tough
- Customer take up of businesses will be slower than projected
- Expense cuts are a must
- You have to become cash flow positive
It is all about survival for your business. To do this, you will need to:
- Have a “must have” product
- The revenue model must be established – no time for speculation / experimentation
- You must be realistic and understand market uptake
- Cutomers must be able to pay for the service
- Cash is king
- Have to become cash flow positive
In cutting costs, they suggest the following areas be investigated:
- Decrease engineering head count
- Reduce the features of new products to those that are essential
- Measure and cut those marketing elements that are not working
- In sales and business development, are you getting the returns on any investment
- What does the sales pipeline look like and are they realistic sales
- Delay payments to manage cash burn
- What other costs in the business are just not essentia
I think their summary is great – here are the main points:
- Perform a quick situational analysis
- Adapt quickly
- Use a zero based budgeting approach
- Make cuts
- Review salaries
- Employ a heavily commissioned sales force structure
- Bolster balance sheets
- Become cash flow positive as soon as possible
- Spend every dollar as if it is your last
The best part of the presentation are pages 39 – 56 (Read it here)
