Are you wondering about what to do about scaling up in a recession? We are now nearly two months into a combined health and economic crisis. Many companies will have had a chance to address cash flow and strategic issues. Are you ready to examine your cash flow and strategic issues? Do you need a structured approach? Here is some guidance to help you make the right decisions about how to proceed.

For solution providers who are starting or scaling and require substantial venture capital investments to be able to grow, capital may be restricted for some time. During this crisis, venture capitalists are likely to invest in fewer firms, offering lower dollar amounts and for lower valuations. Startups and scaleups that rely on capital infusions will need to conserve cash. The question: How to do that? Here is one strategy to conserve cash:

  1. Determine whether the markets for your products are the same or have changed and adjust plans accordingly.
  2. If there are no opportunities in your current market, you will need to pivot.
  3. If a pivot is not necessary, focus on the market segment with the best potential, instead of the entire market.
  4. Use this time to concentrate your R&D efforts on improving product differentiation in those markets with the highest potential.

Whether you need to slow down the growth in spending or actually reduce headcount or cut back on marketing communications spending, a strategy of focusing on the highest potential market segments will conserve cash, optimize growth and produce a plan that will be supported by existing and prospective investors. This should be done with a view to focusing on value for customers to drive growth and how this translates to value for investors.

For a white paper on Scaling up in a Recession, click here.