Wait, are our customers actually solvent?

An important question every startup needs to ask ASAP

🎉 Don’t believe the funding hype

If your startup serves other startups, you need to prepare for tough times. The fact that a startup raised a billion dollars six months ago doesn’t mean they are flush or will continue to pay you if times get tough(er).

🌆 Big companies have different risks

Legacy corporations may not be a safer bet. With the increased scrutiny they operate under, calls to slash costs can come quickly, go deep, and your contract may become collateral damage in a single earnings call.

⌛️ Plan for the worst

Your actual runway is your bank account/burn rate. Growth projections and even maintaining your baseline are upside scenarios in the face of a prolonged contraction.

🏴‍☠️ Diversify or die

You are at significant risk if one customer accounts for more than 20% of your revenue.

🎁 Overdeliver

First, no matter your size or customer mix, this is the time to deploy white-glove service. Do not give customers the slightest pretense to scale back. Pay close attention to your account execs.

📈 Make yourself indispensable

The most important thing you can do at this moment is to demonstrate *quantitatively* how you create value for your customers either by cutting costs or delivering revenue.

⚔️ Find more champions

B2B startups often have a single advocate within their customer’s organization. This is a major risk. If that person is let go, your deal might go with it. Even if they stay, they may have to make drastic budget cuts.

🎯 Target smarter

Now is *not* the time to bring on high-churn customers. Instead, make an extra effort to target your sales efforts towards the highest ROI customer profiles. Quality of revenue is more important than quantity at this point in the cycle.

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