I noticed that for the past week or so that there has been a surge of people writing posts to startups on how to manage, or how to survive this time of crisis. Although some of them are good, most of them are grounded in “positive psychology” which with all honesty, for a moment might have you feel better, yet not really making any difference in the long run. Action does!
We do not know if the current market conditions will last a week, a month or a year, the consensus is that it will be 3-4 months before we will start gradually getting up and running again. And yet in every crisis, there are hidden opportunities as well. I know that it is not the most popular statement, yet it is true. Those startups that will find a way to survive, will have many more opportunities than before the crisis began.
As an investor, as harsh as might be sound, it gives us the opportunity to see how startup founders rise up to the challenge and learn how they operate in crisis situations? What is their mindset? How resourceful they are? And what action will they take?
The reality is, no matter how hard you try, it is very difficult to simulate or stage a situation like this one. There is a saying; leaders are discovered in times of crisis.
Here are some founder(s) power tips from the Navy Seals crisis management playbook:
ASSESS – Crisis’s are evolving situations in nature, stay tuned to changing conditions, minute by minute, hour by hour, day by day. Rely only on REAL, credible information for decision-making purposes. Do not assume, Verify. Assumptions are the source of all breakdowns.
Suggested Practice: Have a 15-20 minute Pow Wow at the beginning of each day and 15-20 by the end of each day and include all critical people in your business. Discuss changes in decisions and actions. Make sure people are focusing on what they CAN control vs. what they CAN’T.
ADOPT – Make the necessary changes with velocity and determination. Be real, overestimate everything, do not underestimate anything. Plan for the worse and hope for the best. Use the 2.5X factor. Multiply every number by 2.5X. If you think it will take 2 hours to – plan for 5 hours if your burn rate is $10K plan for $25K. It will keep you safe and moving.
Suggested Practice: Review your company “Scorecard” Daily and make the necessary updates so you start the next day with a strong relationship to reality exactly the way that it is and the way that it is not. Find the delicate balance between optimism to cautious pessimism.
PRESERVE – Stop all discretionary and nonessential spending and preserve your “fuel” (capital). Cash to business as fuel to a car without it you will not be able to move.
Suggested Practice: Each day ask yourself: “what payment can I differ, what service can I negotiate, what expenses can I cut? – Remember everyone is in the same boat, you have the leverage.
MINIMIZE – Preserving your energy and your resources should be at the top of your mind. Take only critical and essential actions. As we say in the SEALS; “If you take the shot, make it count”
Suggested Practice: Ask yourself daily; ‘What is that I can live without tomorrow and still be able to operate my business”? – implement the changes, Now!
COMMUNICATE – It is HIGHLY critical to stay in communication with your people and stakeholders. Despite a common misconception, people are more afraid of not knowing more than they are afraid of receiving bad news. Not communicating bad news does not protect people, it diminishes and disrespects them.
Suggested Practice: Send daily communication to your people to communicate, success, failures, “bad news” and new management decisions. Remember there is no such thing as over-communication but the issue always is lack of communication that throws people off to the deep end, do not spare the details.
I hear a lot of people saying: “ I hope it will end soon” or “I hope we will be OK” or “I hope we will get out of it soon”. We say hope is not a management strategy. We call it; “Crisis Management” because it requires a different mindset than business as usual.
Remember my 2.5X factor? If in an optimistic view is that we will get back to business within a 90 days plan for 225 days as a best-case scenario. The bottom line is that between the worst case to the best case, it will take until Q1 in 2021 to start the recovery process, I say.