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boostrapper · 1 year

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5 Ways for Startups to Survive Recession

Introduction

Major economic forecasting institutions and experts are predicting an economic recession as a series of complex real economic problems such as inflation, supply chain collapse and geopolitical risks have recently emerged one after another. The predicted recession is to put early stage startups at risk, directly. The less activities from VCs recently forced startups to prepare for all the scenarios.

While the current economic recession may present challenges for startups, it can also be an opportunity for them to demonstrate their resilience and adaptability. Here are some strategies that can help your startups that will not only improve your chances of survival but also to attain a healthier and sustainable future growth.

Here are five ways for a tech startup to navigate a recession:

1. Extend your cash runway

As a startup, it is essential to focus on extending your cash runway in order to ensure sustainability and success during recession. This involves making sure that you have enough cash on hand to cover your expenses and maintain operations for as long as possible. According to a survey by the National Venture Capital Association, 82% of startups that fail do so because of premature scaling, or expanding too quickly without adequate resources. By carefully managing your cash flow and taking steps to extend your cash runway, you can avoid this common pitfall and give your startup the best chance of success.

Here are three key steps to help extend your cash runway:

Get a clear overview of your financial standing: Understanding your current cash flow, liquidity, and forecasts is essential to extending your cash runway. You can track your cash flow by looking at your income and expenses on a regular basis. Your liquidity is a measure of how easily you can access your cash and convert it into other assets. You can measure your liquidity by looking at your current assets, such as cash and accounts receivable, compared to your current liabilities, such as accounts payable and short-term debt. Finally, your forecasts are estimates of what your future financial performance might be. You can create financial forecasts by analyzing your past financial data and making assumptions about future economic conditions.

Change approach from optimistic to conservative: By being more cautious in your spending and making more conservative assumptions about your future financial performance, you can reduce your expenses and increase your cash runway. This might include reducing your marketing budget, delaying hiring new employees, or negotiating better terms with suppliers.

Identify unnecessary cost drivers: Unnecessary cost drivers are expenses that are not essential to your business and can be eliminated or reduced. Common examples include unnecessary travel, excessive entertainment expenses, and unnecessary office supplies. By identifying and eliminating unnecessary cost drivers, you can free up cash that can be used to extend your cash runway.

2. Consider creative ways of cost cutting

To maintain financial stability and profitability, you should consider creative ways to cut costs. Although layoffs may seem like a good option at first, they should be considered as a last resort because they can negatively impact morale and productivity. In addition, layoffs come with associated costs such as severance pay and unemployment benefits, which can be both a financial and administrative nightmare. Instead, it is recommended to start with other cost-cutting measures before considering layoffs. Being creative with these strategies can help you achieve better long-term results.

Here are some of them worth considering:

Optimization: Find ways to do things more efficiently, such as streamlining processes, automating tasks, and using technology to improve productivity. By optimizing operations, businesses can reduce their costs without sacrificing quality or productivity.

Minimize operational costs: Another key strategy for cost cutting is to minimize operations costs. This includes finding ways to reduce expenses such as utilities, rent, and transportation. For example, businesses can negotiate lower rates with suppliers, adopt energy-efficient practices, and use public transportation instead of company vehicles. According to a survey by the National Small Business Association, 29% of small businesses reported that their top cost cutting strategy was reducing energy costs, and 27% said they reduced their travel expenses.

Reduce cost of goods sold (COGS): COGS refers to the direct costs associated with producing and selling products or services. By minimizing COGS, businesses can reduce their expenses and increase their profitability. This can be achieved through a variety of strategies, such as negotiating lower prices with suppliers, reducing waste, and finding more efficient production methods.

Stretch R&D projects timeframe: For businesses that rely on research and development (R&D) to innovate and stay competitive, stretching the timeline of R&D projects can be a cost-effective strategy. By taking more time to develop new products or technologies, businesses can spread out their R&D expenses over a longer period of time, which can help to reduce their overall costs.

3. Strategic Partnerships

Strategic partnerships are an important tool for growing startups. They help you to access new markets, share resources, improve competitiveness, and gain access to a wider network of industry contacts. Partnerships can help you save time and money and accelerate your growth by leveraging the resources and expertise of your partners. They can also help you differentiate yourself from competitors and gain a competitive edge in the market by leveraging the reputation and credibility of your partners. Overall, strategic partnerships can be an important part of your growth strategy and can help you succeed in the market. McKinsey & Company found that successful strategic partnerships can lead to a variety of benefits, including increased market access (cited by 74% of respondents), cost savings (cited by 67%), and access to new technologies (cited by 59%).

Here are three ways that you could:

Communicate with your key partners about how they are handling the downturn: Effective communication is key to the success of any partnership, and it's especially important during times of economic downturn. By staying in touch with your key partners and asking how they are handling the challenges of the current environment, you can better understand their needs and find ways to support each other.

Focus on building stronger relationships: In times of uncertainty, it's important to focus on building stronger relationships with your strategic partners. This means investing time and effort into understanding their business needs and goals, and finding ways to work together more closely. By building stronger relationships, you can create a sense of trust and mutual support that can help your business weather any economic challenges.

Consider new strategic partners to combine efforts for shared results: Another way to grow your tech business through strategic partnerships is to consider new partners who can help you achieve shared results. For example, you might look for partners who can help you access new markets, leverage new technologies, or bring new skills and expertise to your business. By entering into win-win agreements with these partners, you can combine efforts and achieve shared results that benefit both parties.

4. Pivot business model

During times of economic recession, it's important for businesses to be flexible and adaptable in order to survive and thrive. One key strategy for navigating these challenges is to pivot your business model, which involves making changes to the way your business operates in order to better meet the needs of the market.

Here are two key approaches to pivoting your business model and thriving during a recession include:

Adapt the current business model to the changing market needs: A key approach to pivoting your business model and thriving during a recession is to adapt it to the changing needs of the market. This could involve revising your product or service offerings, shifting your focus to new customer segments, or finding new ways to deliver value to your customers. Experts say, 70% of tech startups reported successfully pivoting their business model in response to the COVID-19 pandemic, resulting in increased revenue and market share. By proactively adapting your business model to the changing needs of the market, you can stay relevant and competitive in the face of economic challenges.

Identify new revenue streams: Another way to pivot your business model is to identify new revenue streams. This might involve exploring new business opportunities, such as offering new products or services, entering new markets, or finding new ways to monetize your existing offerings. According to a survey by the U.S. Census Bureau, 47% of small businesses reported introducing new products or services in response to the COVID-19 pandemic. By diversifying your revenue streams, you can reduce your reliance on any one source of income and improve the resilience of your business.

5. Use agencies to outsource business processes

Outsourcing certain business processes to agencies and freelance contractors can be an effective way to improve profitability and increase efficiency. According to a survey by the National Association of Small Business Owners, 41% of small businesses reported outsourcing at least one business function, with the most common functions being marketing, accounting, and human resources.

Here are three key benefits that outsourcing business processes can help a business improve profitability:

Avoid administrative burden: One of the main benefits of outsourcing business processes is that it allows businesses to avoid the administrative burden of managing these functions in-house. By outsourcing tasks such as marketing, accounting, and human resources, businesses can free up time and resources to focus on their core competencies and drive growth.

Work with agencies and freelance contractors: Another key advantage of outsourcing business processes is the ability to work with agencies and freelance contractors who have expertise in specific areas. For example, a marketing agency may have specialized knowledge and experience in social media marketing, while a freelance accountant may have a strong understanding of tax laws. By outsourcing these tasks to experts, businesses can ensure that they are receiving high-quality work and maximizing their profitability.

Attain flexibility to scale up or down as per uncertain market dynamics: In addition to avoiding administrative burden and accessing expertise, outsourcing business processes can also provide businesses with flexibility to scale up or down as needed. This is particularly important in times of economic uncertainty, when market conditions can change rapidly. According to a survey by the National Small Business Association, 52% of small businesses reported being negatively impacted by the COVID-19 pandemic, and 48% said that they had experienced a decline in sales. By outsourcing certain functions, businesses can quickly adjust their operations to meet the needs of the market, which can help to improve profitability.

Conclusion

It is crucial for businesses to take proactive steps to increase their chances of survival during a recession. This can be achieved through a combination of strategies, including extending your cash runway, implementing creative cost cutting measures, forming strategic partnerships, pivoting your business model, and outsourcing certain business processes to agencies. By carefully managing your finances, accessing new markets and resources, and adapting to changing market conditions, you can weather the downturn and position your business for long-term success. Don't let a recession hold you back – take action now and set yourself up for success.

#boostrapper #startup #advice for startup #bootstrap #business development #entreprenuership #recession proof #economic downturn #recession #financial modeling #sustainability

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notthemayor · 6 months

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he's such a GANGSTER thenn he Retired

those last THREE were such GREAT fianceés thenn he Widowed

a million jobs TRY Terminating him but he won't stop Resurrecting

#afterlife #recession proof #friend of whores #repentant thief #gonna remake mysepf again soon

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jparksjr · 1 year

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Is You Curious About How Long A Recession Last?

The Answer Is In This Blog Post With Extra Information About A Recession.

#recession #recession proof #economy #economy crisis #recession 2022

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digitalguap · 2 years

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How To Profit In A Bear Market (6 Ways)

I'm sure you have heard this before or Something along these lines but many People say that we should fear the bear Or be afraid of a bear market and Everyone is afraid of the inevitable Bear market and you're going to hear More and more people talking about it as We get into a more extended bull market But you guys really have no reason to Fear this and if you guys do have doubts Or concerns…

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#bear market #bear market explained #bear market strategies #bear market strategy #bear market trading strategies #how to invest #how to invest during a recession #how to invest during bear market #how to invest in a bear market #how to invest in a recession #how to invest in a recessionary environment #how to invest in a stock market crash #how to invest in stocks #recession #recession investing #recession proof #stock market #stock market recession history #stocks

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thankstothe · 4 months

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#house md #gregory house #james wilson #lisa cuddy #hilson #screencap #s07e14 “Recession Proof”#“i don't want you to be fine i want you to be happy”#yeah he's not even fine here #relatable response from wilson #like what the fuck do you even do here?#also he singles out happiness out of what house said because because love is not a question between them

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ratsalad · 2 years

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shots that convince you you’re watching breaking bad again

#house md #vaaya moodu #blood cw #7x14 recession proof #HE LIES TO HIS WIFE TOO I CANT WAIT TO SEE WHERE THIS GOES #houseposting

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kavanchoksijapan · 3 months

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Kavan Choksi: Recession-Proof Investments for Stability

Kavan Choksi: Get Into These Easy Investments During Tough Times

Navigating economic uncertainty might be challenging, but making smart investment decisions can bring stability. Kavan Choksi talks about the importance of securing your investments in challenging periods, ensuring success even during tough times.

Mix it up

One of the most effective ways to recession-proof your investments is diversification. Spread your money across different asset types, such as stocks, bonds, and real estate. This helps minimize the impact of a downturn in any single sector.

Choose stable industries

In times of economic downturn, certain industries maintain more stability than others. Think about investing in sectors such as healthcare, utilities, and consumer goods, as they demonstrate resilience even during challenging periods. Dividend stocks

Look for stocks that regularly pay dividends. These stocks offer a steady income, no matter how the market swings. Government bonds

Consider government bonds for a safer investment during recessions. They provide a fixed interest rate and return of your money when they mature. Precious metals

Gold and silver are reliable choices during economic uncertainties. They act as a buffer against inflation and currency changes. Real estate investments (REITs)

Real Estate Investment Trusts (REITs) are a good investment for income through dividends. Kavan Choksi says they can be a resilient choice during economic downturns. Emergency savings

While not an investment, having a strong emergency fund is crucial. Kavan Choksi says you have to make sure you have enough saved to cover essential expenses in case of unexpected financial challenges. Corporate bonds

Invest in bonds from stable corporations. These bonds have a lower risk of not being repaid and can provide a steady income through interest payments. Utility stocks

Utility companies tend to maintain steady cash flows despite economic conditions. Investing in their stocks can bring stability to your portfolio.

Choose quality

During a recession, stick with quality over risky investments. Kavan Choksi advises going for well-established companies with strong financial foundations that have weathered economic downturns before. Making informed investment decisions can help you weather the challenges of a recession. By diversifying your investments and choosing stable options, Kavan Choksi believes you can bolster your financial position and work towards long-term success. Drawing from his expertise in economics and finance, Kavan Choksi has cultivated a deep enthusiasm for the world of investing. He finds joy in empowering others in growing their financial resources. Follow this blog for updates.

#kavan choksi japan #kavan choksi #Recession-Proof Investments #Stability #Easy Investments #investment

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goodspiritsnewsat · 4 months

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GSN Review: Recess Zero Proof Mocktails

Recess relaxation beverages believes that alcoholic beverages aren’t the only way to enjoy the holidays. Enter Recess’ Zero Proof Craft Mocktail collection, its first official expansion into the non-alcohol category. Recess Zero Proof is a line of canned craft mocktails designed to bring the alcohol-free experience from replacement to enhancement, it says. The collection’s four flavors —Lime…

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#Recess Zero Proof #Recess Zero Proof Mocktails

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pennycallingpenny · 5 months

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18 Best Recession Proof Side Hustles To Make Money In 2023

Ever worried about money? We get it. That’s why we made a list of 18 recession-proof side jobs for 2023.

Think of them like your money superheroes that stay strong even when things get tough.

No confusing stuff here – just easy ideas to help you make extra cash.

From doing things online to other simple jobs, we’ve got you covered.

Take a look, find what suits you, and let’s make your wallet feel safer, no matter what’s going on.

To read more, visit now - https://www.pennycallingpenny.com/recession-proof-side-hustles/

#recession-proof side hustles

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creekbed-burial · 8 months

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Currently jealous of everyone with thick hair (i tried braiding my hair and it looks as thin as a rats tail)

#thoughts #if u have thick hair consider yourself lucky #because i literally cant do ANYTHING cute with my hair #its also like a lil past collarbone length so if you have long and thick hair just know im jealous #i cannot grow out my hair all that much AND its thin and thats proof i got all the recessive genes

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nayantikasri · 10 months

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Hiring During Recession: Key Strategies to Hire During A Recession

When the economy experiences a downturn and businesses face financial challenges, hiring new employees may not be the first thing on their minds. However, hiring during recession can present unique opportunities for organizations to acquire top talent and position themselves for future growth. In this article, we will discuss key strategies to be followed when looking to hire remotely during a tech jobs recession.

Key Strategies to Hire During A Recession

Here are the key strategies to hire during recession tech-

Evaluate Current Needs

Before initiating any hiring process, it is crucial to assess your current needs and determine the roles and skills that are essential for your organization's success. By identifying the critical areas where additional talent is required, you can focus your hiring efforts effectively and make strategic decisions.

Refine Job Descriptions

Craft clear and concise job descriptions that accurately reflect the responsibilities and expectations of the role. Emphasize the skills and qualifications that are most important for success in a remote work environment. Be transparent about the challenges and benefits of working remotely to attract candidates who are well-suited for this setup.

Streamline Recruitment Process

In a recession, candidates may be actively seeking new opportunities due to layoffs or uncertain job security. Streamlining your recruitment process can help you secure top talent before they accept offers from other organizations. Reduce unnecessary steps, minimize delays, and provide regular updates to candidates to keep them engaged and interested.

Prioritize Soft Skills

When hiring remotely, it is essential to consider a candidate's soft skills, such as communication, adaptability, and self-motivation. Remote work requires individuals who can work independently, collaborate effectively in virtual teams, and quickly adapt to changing circumstances. Look for candidates who possess these qualities, as they are crucial for success in a remote work environment.

Offer Competitive Compensation

During a tech jobs recession, job seekers may be more cautious about changing roles and require additional incentives to consider new opportunities. Ensure that your compensation packages are competitive and align with industry standards. Consider offering benefits such as flexible work schedules, professional development opportunities, or performance-based bonuses to attract and retain top talent.

Conclusion

While hiring during a recession may seem challenging, it can also present opportunities for organizations to acquire top talent and position themselves for future success. By following key strategies such as evaluating current needs, leveraging technology, refining job descriptions, streamlining the recruitment process, prioritizing soft skills, and offering competitive compensation, businesses can effectively hire remotely during a recession. By embracing these strategies, organizations can build a strong workforce that will contribute to their resilience and long-term growth even in challenging economic times.

#recession tech #Tech jobs recession #recession proof tech companies #Hiring during recession

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