For most entrepreneurs, the prospect of having their business fail seems somewhat abstract, particularly when they’ve been operating for several years. However, so many companies are just one or two disasters away from shutting down for good. As we’ve seen time and time again, a business can collapse without warning.
So, if you want to avoid sleepless nights and high levels of anxiety, you need to prepare for the inevitable. In this article, we’re going to talk about some of the ways a disaster could impact your business. We’ll also discuss how to formulate a strategy of survival.
Disaster Can Come Anytime, From Anywhere
As 2020 proves, events beyond anyone’s comprehension can strike, catapulting the world into uncharted territory. However, while the COVID pandemic does illustrate the need for disaster planning, the fact is that there are plenty of other ways your business can go under. Here are a few examples that may not come to mind immediately.
-SEO Blacklisting – Google is notorious about how it manages its algorithms, and the tech giant isn’t afraid to throw its weight around. If you’re using third-party ad software, a single bad apple could blacklist you from showing up in searches. When that happens, you’re left holding the bag.
-Platform Updates and Rule Changes – If your company relies on third-party software to exist (i.e., Facebook ads, YouTube, etc.), then you’re assuming that platform will remain steady forever. However, because another company runs it, they can drop you or change the rules without warning. Suddenly, you could be left without a substantial revenue stream, all without doing anything to warrant it.
-Customer Churn – All SaaS companies have a customer churn rate, but you want to learn how to reduce it for your big clients. Many variables can cause a client to drop your service, and if they were a significant chunk of your bottom line, you have to replace them ASAP.
As you can see, disaster doesn’t always have to be of Hollywood-level proportions. Now that we’ve gotten your attention, let’s discuss some tips for handling a downturn and how to move forward with customer retention strategies.
Learning to Prioritize Costs and Expenses
When a company is hit with a massive setback, two priorities come into play – reduce costs and increase revenue. However, while the first part may seem easy, it’s actually quite tricky. All too often, CEOs and founders will cut away the low-hanging fruit, such as snacks and drinks in the break room. However, saving a few hundred here and there isn’t going to salvage your business.
Instead, you have to make a list of priorities and chip away at the most considerable costs for your business. For a SaaS company, these can be labor, cloud hosting, and vendor relationships. Assuming that you weren’t wasting thousands of dollars each month on unnecessary tools, you’ll have to make some hard choices.
Also, when talking about cutting down on “perks,” you have to evaluate the value that they bring to your staff. During a downturn, your employees are the lifeblood of your business. If they’re hurting, a small perk or reward can make a huge difference. Cutting these elements can lend a sense of “profits over people” mentality, which will permeate the workplace.
Setting a Path for Moving Forward
Once you’ve established where you can make cuts, it’s time to focus on building a healthier and more resilient revenue stream. Here are some tips to help you weather the storm and come out better off when things return to normal.
Focus on Your Current and Past Customers
As a rule, it’s easier and cheaper to market and upsell your current customers than to attract new ones. During a global crisis like COVID, your clients are probably hurting as well. Now is the time to reach out and see how they’re doing and what they can use from you. While we don’t advise raising prices immediately to compensate, perhaps you can add more value to the software and charge more accordingly.
Use Downtime to Create a Better Product
No matter what, people are willing to buy items that have value. So, as long as your software delivers on quality, you can build a loyal audience. If you find yourself with downtime suddenly, work on fixing any issues or making the customer experience better. Then, as things start to improve, you can rebound that much faster.
Bottom Line: Preparation Can Enable Your Business to Weather Any Storm
A disaster doesn’t have to spell the end for your company. No matter how long you’ve been around, the right planning can make all the difference. If you want to learn more about how to protect your business, check out the latest episode of the SaaS CX Show here. We talk with James Avery of Adzerk, who went through this exact situation himself.