Pro-Tips on TechStars for managing your business

Will Sanchez, Lecturer and EIR and a mentor at TechStars Boston, shared the following pro-tips on staying sane (Excerpted from the TechStars town hall meeting)

  1. Re-evaluate your business...cut costs, review and change your 2020 forecasts, stop hiring, draw down debt and do everything you can to extend your run rate. Travel and expense spending should be reduced to zero while people are not traveling. Your 2020 budget is wrong. Plan for new scenarios that are more realistic now, rather than assuming you can weather the storm and simply stay the course. Control spending and cash while you can. Focus on optionality that cash reserves bring rather than a growth at all costs mentality in this moment.

  2. Stop hiring and recruiting for a while. Delays are better than over-extensions. New employees can’t work from home effectively anyway. Push this activity off.

  3. Make tough furloughs, salary reductions, and, as last resort, layoffs. With any layoffs, consider extending option exercise periods. Be thoughtful about each approach and try to extend healthcare coverage for all regardless of the path you need to take

  4. Don’t haggle on fundraising and M&A deals. Get them done. Now is not the time to push hard on valuations or terms. Be flexible, and recognize that the landscape has changed. Move quickly on any open deals to get them to the finish line.

  5. Reduce optional expenses. Be aggressive about this and target anything in your expense structure that isn’t truly necessary. Review and stop all new purchase activity unless it's critical. Cash is king until you have a handle on your new reality.

  6. Consider a temporary salary reduction. Many people will be willing to take a 25% - 50% salary cut instead of being laid off given that choice. You have to lead by example here - you have to take more than everyone else (or, at the minimum, the same %, which is greater $). This should not be a deferral, nor is it a "we'll make it up with equity or pay it back in the future." It's a "we are all in this together" maneuver. The length of time of this is indeterminate, but the commitment has to be clear around what it is and what happens when things stabilize. If your culture doesn't support this, you should be contemplating a reduction in force to tighten up expenses. Now is the time to be in cash conservation mode. In our experience, you should be thinking about cutting back about 25% more than your initial reaction likely is.

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