This article is dedicated to startups affected by the outbreak.
Shenzhen Translation Bureau is its compilation team, focusing on technology, business, workplace, life and other fields, focusing on introducing new foreign technologies, new perspectives and new trends.
Editor’s note: The impact of the new crown epidemic on the global economy is unpredictable. Faced with this sudden disaster, many start-up companies have run out of cash and have to face the dilemma of layoffs. As an employer, how do you deal with layoffs? How do you further communicate and work through the difficulties of the members who remain in the team? The author is an international CEO trainer and a venture capitalist for three technology companies. Here are his suggestions. This article is translated from Medium, author Dave Bailey, the original title is “What to Do If Your Startup is Running Out of Cash”.
In the face of capital urgency and having to make a series of difficult decisions, such as reducing capital reserves and layoffs, this is a nightmare for every business owner. Faced with such a situation, many people will ask me: What will the CEO of a certain company do? They want to be able to refer to other people’s decisions and reassure themselves. However, I think that every business owner should make a suitable decision based on his own situation, not just follow the trend. In order to be able to understand your situation and make decisions that are beneficial to the company, I hope you can ask yourself the following important questions:
1. How much financial risk can your company take?
I need to explain: when your company’s expenditure exceeds income, when your company is in a loss state, the time the company can maintain can be calculated. And this period of time is still your adjustment and sprint phase.
To calculate the time of this “sprint”, you need to consider many unknown factors. You need some models to help you calculate the worst results. For example, you should consider what to do after the following situations occur:
1. When the company’s income remains low for three months, six months, and one year; 2. During these three months, six months, and one year, you cannot raise To more funds; 3. At this stage, you have reduced costs by 25%, 50% and 75%.
For start-ups, there is a checklist to help you improve your response strategy and deal with the crisis of lack of capital flow.
A month ago, if you came to tell me that your company can last for six months, then I would suggest that you start cutting costs and let the company stay longer. During the epidemic phase, the situation will be special: if you tell me that the company can still maintain one year, then I also recommend that you start to reduce costs proactively. Even those excellentThe company may also find it difficult to raise sufficient funds in the next few months, while still consuming a lot of cash. I think in recent months, the question before all startups will be: The budget must be cut, but how much?
Remember, the longer you make a decision, the more you need to cut in the end.
2. How do you “lay off staff correctly” in a crisis?
Different companies have different ways to reduce costs. You should learn more. But for most startups, personnel is the biggest expense. So when costs need to be cut, layoffs are their first choice.
However, many employers and employees are willing to use layoffs instead of layoffs. In this way, the company can continue to survive without the risk of unemployment. The other approach is even more devious: indefinite unpaid leave. This means that employees went home and went out of business during the crisis, but were not fired. Once the crisis is over, employees can return to work.
But I know that for many startup employers, most of them choose to dissolve their team-this decision is very difficult, but most employers have to face it.
Why do you have to face it? It’s simple, because if you don’t lay off people and you need to pay, your company is one step closer to going bankrupt. So that’s why the seemingly terrible option of layoffs is accepted by most employers. I understand that firing your team is not an easy task, and you may have a good relationship at work, and at this moment they have done nothing wrong, and your decision may seem very ruthless.
But when you have to choose between “relentless” and “bankrupt”, you have no choice.
Psychologist Paul Bloom defines empathy as “feeling what others feel” and warns us that decisions based on empathy often end up with bad results. He analyzed that it is much easier to apply empathy to a person (an employee who may be laid off) than to a group (the entire company); at the same time, empathy can also lead to prejudice, that is, we often sympathize with us People in similar situations; finally, empathy can easily become a weakness, making it easier for us to be manipulated.
In addition, Bloom warns that when you constantly accept and perceive the emotions of others, you will quickly become exhausted, especially in a crisis.
Bloom suggests replacing “empathy” with “compassion.” When you are driven by compassion to make a decision, you can still care for others, respect them, and regret their situation. But you will not feel the emotions of others-this is for your own health.
When you make a layoff decision, ideally, you need to talk to each employee about the decision separately. You need to andThey explain the company’s current situation and explain that layoffs are a last resort. You want to thank them for their contributions, understand their fragile mentality as employees, and take the initiative to support them. More importantly, you have to pay them the salary they deserve, and if you can afford it, you can generously donate and give a bonus for condolences.
3. How do you mobilize everyone in the face of the remaining employees?
It is not an easy choice for many employees when they are willing to stay and advance with the company when many colleagues leave.
Crisis is often the time to test loyalty. The word “mission” often has a special meaning. When you want to win the respect of others, you often replace the word “job” with “mission” because it means important, difficult and exciting work. Because of this special meaning, people don’t say strange words like “My mission is to do laundry.”
At special moments, it is important to think about what the company’s “mission” is. You need to think about what your company hopes to achieve in the end-what’s the point of working without a clear end goal?
A clear “company mission” can inspire and reunite the team. You can find your company’s ultimate goal by filling out this sentence: “Our mission is to help ____ (a certain type of consumer) ____ (to achieve an expected goal / result)”.
Your company’s business is inseparable from customers, so when sorting out your goals, you need to know which group you are serving and why you are serving them. If the ultimate goal set by the company is not exciting enough, then it’s time to consider changing it.
4. How do you support your team?
This article should be explained especially in the context of the spread of the new crown epidemic. The development of the epidemic is not just about the health of the public. Your team will also face a crisis as a result: will the team members’ medical budget increase as a result? Do they have to worry about the elderly at home? Will children need extra care? To be more precise, you also need to consider whether they need more food, repayment of mortgages, or reorganization of disrupted lives?
Suffice it to say: Most employers are not very clear about the above issues. As a team leader, you are often the last to know that your team members are unhappy and stressed. When team members can do their essential work as always, you cannot assume that they have not encountered any difficulties in their lives.
I suggest that you set up a “support group” that meets several times a week. I know the idea sounds a bit scary, and I explain it this way: first you need to set up a temporary group of 5 to 7 people; then everyone speaks at the meetingTalk about what you have done recently (including work but not just work). You have done a good job in short. In the end, everyone talks about the difficulties they have encountered recently.
If you try to set up such a group and have a meeting, you might be surprised to find that everyone has encountered so many difficulties recently. The core of this piece of advice is that you listen to your team, understand their suffering, and then do whatever you can to support them—whether in terms of tasks or financial resources. Your team will be different as a result.
5. What kind of communication frequency is most suitable?
When new policies and measures are introduced, your company needs to adjust them. But if your team has recently started telecommuting from home, then communication becomes a problem. When working remotely, your communication frequency tends to decrease.
Then you may run into this problem: You just completed your goal for this quarter a few weeks ago, but you do n’t know how things will develop in the next quarter, and whether you want to continue with the original plan. In fact, the environment cannot be static. In most cases, you need to constantly adjust your plan. At this time, you need to maintain communication with your team and clearly communicate the adjustments to everyone.
In a crisis, this communication becomes even more important. You need to make sure everyone can communicate without barriers. The communication methods that can be selected include but are not limited to: regular meetings, general meetings, one-on-one conversations, retrospective meetings, and so on. You can also hold additional meetings for new members.
In addition to the meeting itself, what you say at the meeting is also important. You can take the opportunity to repeat the company’s mission and emphasize why it is so important today. You can share your recent situation and the information you have collected to ensure that your team can adjust to changes in the environment.
Don’t show your fear and anxiety at the meeting, because this kind of emotion will spread inside the company. Before speaking to the team, you can adjust yourself and take a deep breath. Another suggestion: If you can find the right time, it’s okay to “smoke” a bit at the meeting, after all, humor is a good medicine to drive away fear and inspiration.
The key to communication is listening, not speaking. You need to carefully write down the questions asked by the team members and answer them as honestly as possible. These questions can let you know what they really care about, and your sincerity will eventually move them.
6. It’s time to make a decision
There is so much more we cannot grasp about this crisis. No one knows when the epidemic will come to an end, no one knows what the impact of the economic crisis will be, and no one will know how many people will be killed in the end …… We are in a moment of uncertainty, but we have to work hard to calm ourselves down and do the right thing.
When your startup is facing bankruptcy, you extra need to be strong and decisive, to make the decision a leader needs to make. You need to take steps to keep the company running as long as possible. Many entrepreneurs are considering whether their decisions will have an impact. In fact, your decisions will only affect the people around you (and yourself).
So, I hope you can treat others kindly and treat yourself kindly.
Translator: Michiko