The economy is cyclical, and from time to time a crisis comes and goes. That’s right – one of them is just beginning.
Founders are more or less aware of it, maybe even scared, and investors are re-planning their pockets to support their existing businesses rather than for new investments.
Companies that are at the right stage in their lives have a better chance of bridging the gap than others. Simply because of serendipitous timing.
As a serial entrepreneur, I have been through a few crises: the dot-com bubble in 2000, the subprime crisis in 2008, the Covid-19 in 2020, and what has already started now. I have observed three ways to bridge the gap:
- ignore and die. Many companies just pack up and go home because they can not survive.
- pull back. Cut costs, save money, and make sure you do not close the door on downtime.
- double down. Make sure you have lots of resources and invest to grow so that you are the new winner when the good days come back.
Fair options, right?
No one wants to be stuck in bucket #1, but many entrepreneurs ignore this, put the life of the business on the line and lose. Please don’t be like them.
It may seem that the desirable alternative is #3. As you read this, you may be saying “Ooooo… Yeah, let me take a chance and double my money.”
The problem, however, is that opportunity #3 is not a matter of plan or mind.
It comes as a clear opportunity from the outside.
It may or may not be possible.
I have seen many companies try to double their business and become the #1 loser.
Before a crisis, here is what I would do:
a. Recognise what kind of problem is coming
b. Weigh whether there is a possibility for a double-down. And do it in reality – not in my imagination
c. If the opportunity exists, plan for it and execute it flawlessly. Take the opportunity and be the winner
d. If it does not exist or the risk is far too high, then lay down. Preserve cash for times when cash is king.