Last week I had to make the terrible decision to lay off three amazing people from the Carsonified Family. We really love and value Simon, Elliott and Dom, and it was very painful to have to let them go. We’re a tight knit group so it was tough on everyone – especially those who are having to leave. They’re talented, friendly and hard-working so I know that another company will snap them right up.
If you’re for an amazing developer, Elliott really kicks ass. If you’re trying to find someone who really understands the web industry and has amazing ideas, Simon is your man, and if you need someone who’s an expert in Mobile, just get in touch with Dom. We’re really sad to part ways with these guys – they kick ass.
So why did we do it?
We did it to make sure that Carsonified would make it through this recession. These weren’t emergency cuts. It was a pre-emptive decision that will give the company plenty of what Jason Calacanis calls ‘Runway’ – cash to see us through slow times.
What are you doing about the Recession?
Whether you’re a employee, freelancer or entrepreneur, you need to be thinking about several important issues right now. These tips should be followed at all times, but they’re especially important during an economic downturn.
1. Make sure you’re earning revenue for the company and covering your salary. As brutal as it sounds, the founders of the company are going to be looking at your salary versus the amount of revenue coming in and making a decision accordingly. If you’re not directly bringing in enough revenue to cover your salary, it’s going to be very hard for them to justify keeping you on board. If you aren’t currently covering your own salary, then make sure to be able to demonstrate that your revenue stream is increasing dramatically and you’ll soon be covering your salary and making a decent profit for the company.
2. Demonstrate that you have profit-generating ideas. Create and execute simple ideas that bring in profit for the company. These can be things like selling t-shirts or sending valuable leads to the sales team (make sure your boss knows you did this!).
3. Volunteer to do extra work. I’m not talking about kissing the founder’s ass. I’m talking about doing anything you can to help the company survive. The more you demonstrate that you’re committed to helping the company make it through the recession, the more valuable you’ll become.
Unfortunately, even if you’re working hard on the above three points, sadly there’s no guarantee that you’ll be able to keep your job. Sometimes your company just doesn’t have enough time to allow you to build up levels of revenue or value and they will have to make a tough decision. If you think this might be the case in your situation, it’s important to communicate early and often with your boss to ask whether your job is at risk and what you can do about it.
Entrepreneurs and Freelancers
1. Cut unnecessary costs. And I mean all of them. Here are some ideas:
– Sell the company car and ride a bike. I sold the company Audi A6 and now ride a bike to work – great for getting fit.
– Rent out desks in your office.
– Book your travel tickets way in advance to take advantage of early-bird offers.
– During business trips stay at a cheap B&B instead of in a hotel room.
– Learn how much your broadband, phone and electricity cost. Can you change providers to save money?
– Go through your P&L statement line by line and check all the figures. Any over-spending should be identified and cut.
– Double-check everyone’s credit card statements and get on top of any over-spending.
2. Get deadly serious about watching your cash flow. I’d recommend doing this every week, no matter how big your business. The most important thing is to plan on a decrease in your revenue of at least 20% with costs increasing by 5%. Make this a variable that you can change in one cell which then updates all your revenue forecasts.
3. Require 50% payment up-front from your customers and make sure this is in their contract. Don’t be a hard-ass (as they’ll just ignore you) but make sure you get paid early.
4. Diversify. At Carsonified we recently branched out into consultancy, marketing, design and development. We are pretty good at all these things but we previously only did them for our own products. As soon as we offered these services to other companies, we immediately created a new revenue stream.
5. As hard as it may be, it’s time to lay off staff who aren’t directly generating revenue. If you avoid doing this now, you might go out of business later which means you have to lay off everyone, which will be much, much worse.
6. Think hard about what sets you apart from your competitors. Why should your customers spend their hard-earned cash with you?
7. Take really good care of your big customers. We should take good care of all our customers, but make sure youre paying extra attention to the folks who do a lot of business with you. Ideas: Send them thankyou and birthday cards, call them, send them a personal gift and remember their partner’s or kids’ names.
Times are tough but if you’re smart, you have a great chance of surviving. The key is to not stick your head in the stand – be proactive.
What are your tips for surviving the recession? Please share below.