A VC in Vacationland

Image by Ed Yourdon via Flickr

There is a great article in the April 20, 2009 New Yorker on Hanging Tough in a recession. It is short and well worth a read for entrepreneurs.  The primary message for start ups is that recessions create more opportunities for challengers, not less.  Companies targeted at the lower end of the market, such as Dollar Stores and their ilk, for example, are doing quite well in this economic environment.

But the natural reaction of many companies, even industry leaders, is to hunker down, cut costs and wait until economic growth resumes. This may be the wrong strategy. A Bain & Company study shows that during the 1900-91 recession, twice as many companies leaped from the bottom of their industries to the top as did so in the years before and after.

What are the lessons from recessions for start ups?

1. Increase marketing–with your competitors cutting marketing and advertising expenses, your marketing material will have a higher return on investment, as companies are still seeking solutions to help them save money or better serve their customers.
2. Smarter sales–highly focused sales efforts tailored to specific companies who can really benefit from your solutions is a better strategy than having your sales staff work on increasing a bigger, but questionable pipeline.
3. Love your customers–work with existing customers to make sure that they are getting the full benefits of your solution.  It also gives you an opportunity to sell into other divisions or regions, as well as land some custom features work.

http://static.zemanta.com/readside/loader.js