I was the Startup CEO Archetype: I suspended my Stanford degree to start a company, and after failing I found myself having to keep money to pay off student loans.
With an old Nissan Sentra and roommates in Menlo Park, my biggest variable cost was food. So it was ramen every night. During a good week, I could have had sushi on a Friday night, and if I somehow managed to get under the budget (someone's parents bought dinner) I could have Saturday again with friends.
My guiding principle right now is certainly familiar: control consumption until income streams are no longer predictable. Many startups are in a similar position these days: ramen or sushi?
Some companies thrive during times of COVID-19, but will it last? Get Online Learning Tools - Everyone needs online learning right now. When it reopens in person, some of the learning will likely stay online as we've all learned how to do it, but probably not 100%. Worse than not knowing what the percentage will be is the constant variation between geographic area, segment and vertical. It's not that different from the current situation for me in San Francisco - if I want to find somewhere to buy ramen or sushi, I first need to check which places are open before browsing their ever-changing schedules and menus.
The startup budget now looks a bit like that. The key assumptions we used for planning, already subject to change in a startup, are more volatile. MQL to SQL conversion rate, how many decision makers need to approve a contract, leads generated per event (and what is an event these days), net renewal rates - all of these factors are changing and changing differently depending on of the customer segment, by geographical area and by product category. The new normal is highly dynamic.
Navigate through uncertainty (and reassess quarterly)
How can we budget through this? All rescheduled for April. Plan a similar cycle every quarter. "Are we in a new normal? How do we know? Do we feel confident about this? "
In addition to the usual factors companies use to make predictions on metrics - things like growth rate and conversion rate - we now also need to consider a number of external factors: how the current cycle has affected customers and prospects, how they are retrofitting budgets and their approach to unpredictability in the coming months. It may appear that a new normal is being established, but the COVID flare-ups could occur again causing lockdowns, the US is in an election cycle, and there are prospects for further government intervention.
Here's a recipe for deciding what to cook or if you can go out:
Set hypothesis and analyze, then reset to a regular and irregular cadence
Check your budget every quarter. And every burning month is out of expectations, make changes.
We recommend quarterly because sales cycles tend to be longer than a few weeks, so it is difficult to retrieve data and make changes after only two or three weeks. Here are the key inputs you should monitor:
