How to weather the COVID-19 storm: Lessons from a 2008 startup survivor

Editor’s note: The opinions expressed in this commentary are the author’s alone. Steve Roatch is CEO of Leawood-based 27Global, a custom software development company.

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While the specifics of this coronavirus pandemic are unique, we’ve seen recessions, depressions, national emergencies, wars and even pandemics before.

The good news is that in each of these events, when the crisis abated, the economy came roaring back stronger than before. The key is to weather the storm now so we can thrive in the sunny days sure to come.

2008 was a challenging year to launch a new business, and 2009 was an even more challenging year to grow one, but we buckled down and survived. While preparing contingency plans to ride out the current storm, I reflected on the lessons we learned as a business during the Great Recession. We’re applying those same lessons today amid the COVID-19 outbreak, and you should, too.

Lesson 1: Know Your Market

In his 2002 book, “A Good Hard Kick in the Ass,” serial entrepreneur and venture capitalist Rob Adams emphasized the importance of market validation. This, along with designing a solid business model and hiring a great team, is part of the hard work required to turn a great idea into a successful business.

By the time the recession hit, we knew our business model solved a problem our clients had in the sourcing of software services. However, those same clients and prospects who validated our business model were locking down budgets to survive the recession, which forced us to broaden our target market.

That’s when we expanded our focus from small-to-mid-sized businesses to well-funded startups. Not only did our startup clients supply 100 percent of our revenue in 2009, we were also able to prove our business model and build credible examples of our work to show new clients. 

Knowing our market told us the services we provided were the right ones, but the target market needed adjustment. The key is continual market validation: Listen to your customers, and they will tell you what they need.

Lesson 2: Plan—and keep planning

Mike Tyson famously noted that “everyone has a plan until they get punched in the mouth.” The COVID-19 crisis counts as a punch in the mouth, as did the Great Recession. We decided failure was not an option, and the only way you can boldly declare you will not fail is to have faithfully executed Lesson 1. 

Such tenacity will open your mind to creative solutions you may not have considered otherwise. In 2008, we refused to fail and developed contingency plans. We’re again focused on contingency planning today, working through “what if” scenarios such as: 

• What if a client with a major contract has to cancel? What if an employee gets sick? Solution: Cross-train our consultants on each other’s clients so they can support other projects or step in for a colleague. 

• What if our offshore team in Vietnam has to work from home? Solution: Implement business continuity plans, including the use of VPNs we had them put in place months ago.
• What about that office expansion that just a month ago seemed urgent? Looks like we work from home pretty effectively—let’s get to the other side and reassess how much space we need.

What if our cash flow takes a hit? Then we double down on our efforts to bring our receivables current, precisely calculate cash requirements, ensure lines of credit are in place and watch discretionary spending. 

Just as a slalom skier initiates the turn before reaching the gate, you should start contingency planning in the good times—before a crisis hits. Plans we undertook months and years ago are helping us smoothly navigate the current crisis.

Lesson 3: Communicate

When crisis strikes, communication tends to be the first thing to break down. With nearly a third of employees reporting a lack of action from their employers, this is one of the most important times to check with your clients, your business partners, and your team — both early and often.

Taking time to understand the risks to your clients’ businesses allows you to more accurately assess the threats and potential storms that could be in store for your own business. This in turn allows you to respond with authenticity to your employees’ concerns. In addition to making personal calls to each of our clients, we’ve kept our team informed. 

We’ve also made a point of communicating with our suppliers. Paying them on time, reassuring them about our business stability, and committing to provide ample warning for disruptions in our business helps them stay strong and focused. The last thing we need during this crisis is a disruption in our supply chain.

When the Great Recession took our clients, we’d done zero marketing, and this was a big mistake — one we won’t make again. Now is the time to let your market know you’re there to help in any way you can — today, or when the economy comes roaring back.

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Steve Roatch is founder & CEO at 27Global. Founded in 2008, 27Global designs, builds and operates custom software solutions for businesses of all sizes. To learn more, visit 27global.com or connect with them on LinkedIn and Twitter.