Traditionally, measuring business Success requires a greater understanding of the market-to-life cycle of your company, how customers engage with your product and the macro-dynamics of your market. But in the most challenging environments in decades, those matrices are out the window.
Enterprise applications and SaaS companies are changing their approach to measuring performance and preparing to grow when the economy starts recovering. While there is no blanket rule or guidance that applies to every business, company leaders need to understand their performance and focus on a few key metrics to maximize their opportunities. This includes understanding their burn rate, overall real market opportunity, how much cash they have and access to their capital. Analyzing the health of the company through these lenses will help leaders make the right decisions about moving forward.
Play the game with the hand you were dealt. Earlier this year, our company closed a $ 40 million Series C funding round, which left us in a strong cash position as the market entered recession in March. Nonetheless, as the impact of COVID-19 became clear, one of our board members suggested that we quickly develop a business plan recognizing that we were running out of money. This will enable us to take the helm in the difficult decisions we may need to make on our resource allocation and the size of our workforce.
While I understood the logic of their practice, it is important that companies develop and execute against plans that reflect their true position. The reality is that we raised money, so we revised our plan to balance ultra-conservative forecasting (and as a trained accountant, it’s no stretch for me!) To best utilize our resources based on the market With new ideas to do. Situation.
The burn rate matters, but not at the cost of its culture and its talent. For most companies, talent is both their most important resource and their biggest expenditure. Therefore, this is usually the first area that goes under the knife to reduce monthly expenses and optimize efficiency. Fortunately, moving into the epidemic, we had not yet been hired to support rapid development, so avoided making very difficult decisions. However, we knew that we would not hit our 2020 forecast, which required us to make new estimates and evaluate how we are tackling our talent.