Downturn Survival Tips from Rajesh Jain
Economic downturn and startups – first post (a warm-up) published under the series.
Rajesh Jain shares his take on the said topic.
C2 R2
In difficult times, what is needed is a combination of C2 and R2 (Cut Costs and Ramp-up Revenue). They may seem as conflicting objectives but that’s what the need of the hour is. Things are going to take longer than planned, so a rupee saved is like a rupee earned. It is not the easiest of things to do – once costs are happening, trying to contain or curtail them can be quite challenging. Someone is going to be unhappy. In easier times, one could have gotten away with a little extra spending but in uncertain times, more care needs to be taken to ensure that costs are controlled.
At the same time, there has to be an acceleration of revenue growth. One can only cut costs so much without hurting future potential and opportunities. The key is to think hard on how one can grow existing revenue streams and create new ones – without the limitations that exist. In early stage companies, I think the focus needs to be more on revenue growth. Cutting costs can only prolong a death, not eliminate it, if revenues don’t start growing. And in difficult times, businesses (customers) may also be open to looking at ideas which are different and gave them greater value for money.
In our mobility business, that is what we are now focused on – there are two primary revenue streams that we have (mobile ads and enterprise services). Even as we work on making sure theykeep increasing month-on-month, we are also thinking how some new revenue streams canhelp bridge the gap between what we are spending and what we are earning. This is what makes business so exciting and challenging! I’d love to see us add one more significant revenue stream in the coming months – I don’t know which one it will be, but there are a few potential candidates. The good thing about the mobile business is that it is all blue ocean – we are the pioneers, and have to lead the way. And that brings out the best in us – its not as much competition as innovation that will decide our success.
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Rajesh will be publishing this article on emergic in a day or two, and gladly shared the post for us to go ahead and publish this.
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Related posts:
- Economic Downturn and VC’s Perspective (Sanjay Anandaram)
- Money Saving Tips for Entrepreneurs (Cash is King)
- Tips for Entrepreneurs – Make sure that the dog wants to eat the dog food.
- VC’s tips to Entrepreneurs – Your success is based on making your customer successful
- “..Heads down execution and a laser-like focus on our core business” – Hrush Bhatt, ClearTrip
C2R2? Is there really a need to add more jargon?
Revenue growth I thought was every business’s goal regardless of whats going on.
Its blue ocean? Blue Sky?
And yes innovation that all important thing. Again whats different?
So its pretty much business as usual – with some new jargon.
I agree with Beeba. Very superficial article. As though written in a haste. In today’s trying times every enterprise is looking to increase revenues. But all businesses have different perspective based on geographies and end user target. Like consumer companies are less affected than enterprises that deal with government spending.
Last OCC meet we had the same topic of discussion, some key highlights from the same:
- All startups are anyway bootstrapped, margin to cut cost is hardly there
- Problem is not cutting cost but to grow, for which you need investment, which is drying up or becoming difficult to get. Check link below to a relevant BOK item on Kreeo
http://www.kreeo.com/bok/Venture_Capital/Venture_firms_brace_for_cash_crunch-wi1
- focus on getting customers, this will only help in getting the investment also, strengthen/evolve the biz model, get traction
- Be prepared to self fund for at least 12 months
I think we should look at the downturn as an opportunity (depends on which market you address).
- A lot of competition may disappear also (especially if it is global in nature)
- funded competition will face problems of exit and the flab developed post funding will become difficult to cut
- Resources will be available for cheap
- As rajesh said, more customers will be open to explore new products which give better value for money and low TCO
- Angels may look at the downturn as a good opportunity to invest in futuristic models and having gestation period of 18 months or so
- Those who survive the downturn will enjoy when market starts looking up (it eventually will, we all know)
Great tips Rajesh. If any benefit, I hope the downturn will help companies focus ever more on revenue growth, similar to what happened after the bubble.
[...] be doing in a down economy. A lot of articles focus on the obvious – cutting costs and increasing revenue. Jason Calacanis says startups need to focus on execution, talent and customers (plus some other [...]