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#Strategy : 4 Tips on How to Thrive When Everybody Else Is Crashing…Take these Tips from Founders who have Lived through prior Bubble Bursts to Prepare your Company for the Next One.

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Nobody can pinpoint the timing or impact of a private-tech-sector bubble burst. But preparing for one is not a bad idea, even if you don’t think your company would be affected. Remember that the trickle-down effect from such sector downturns is real–especially if your customer base includes privately funded tech startups or companies that sell to them. The hard lessons learned by survivors of previous bursts will help your company weather the next pop.

Free- Airbag Sign

Diversify Your Client and Supply Base

Paul Baum founded Rumarson Technologies, which refurbishes and resells computer hardware, in 1991. After the economic crisis of 2008, large companies, his primary source of used computers, could no longer afford to replace their systems. Within three months, used supply shrank 75 percent. Surviving required him to expand sources to include major retailers that accept returned computers from consumers.

Baum recommends that you diversify now, especially if your customers or suppliers come from the tech-startup space. “Run your company paranoid,” he says. Baum is taking his own advice. His company, now called Plan-IT-ROI, recently hired a team of paid graduate and undergraduate interns to test and prove new business lines. He expects to launch one of them early next year.

 

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Tighten Up Terms

Former venture capitalist Anand Sanwal founded private company investment database CB Insights in 2010. The data-as-a-service company helps its clients understand high-growth private companies, their investors, and their acquirers.

Sanwal advises founders with a high concentration of startup clients (or those dependent on startups for revenue) to closely monitor the financial health of those clients. Once you determine that any of them are struggling, change your payment terms. In addition to checking on things like whether they are actively hiring for new positions, look at how active they are on social media, when they issued their last press release, whether they’re in a sector that is out of favor with funders, and how long it’s been since they raised money. If you see a break or significant alteration in their fundraising schedule, or if they go longer than 24 months without a fundraising round, that’s a red flag.

“If you have payment terms of 30, 60, or 90 days, look at tightening those up,” Sanwal says. “You don’t want to be left holding the bag.”

Get a Credit Line While It’s Cheap

Sumeet Goel saw the last bubble up close and personal as a venture capitalist. When the dust settled, he founded strategy consulting firm HighPoint Associates, in 2002. To prepare for a bursting of the current tech bubble, Goel advises entrepreneurs to take advantage of the low cost of capital today.

“Get the biggest line of credit you can get,” he says. “Six months from now, if there’s a downturn, everything will be shut down, so at least you’ll have that line locked in.” He also suggests using a small portion of your credit line on a regular basis so you have a history of making timely payments. “I will actually use my line periodically just to ensure that when the downturn happens, they can’t say, ‘You’ve never used it and we’re going to take it away,'” Goel says. (Lenders can close a credit line for other reasons.)

Be Ready to Switch to Profit Mode (if You’re Not Already in It)

In the early days of the dot-com boom, William Hsu, co-founder of venture firmMucker Capital and startup accelerator MuckerLab, raised more than $50 million in venture capital for BuildPoint, a construction software and marketplace company. When that bubble burst, Hsu’s VCs fired him from his own company.

Now Hsu is helping protect startup founders at MuckerLab from another burst by preparing them to switch from growth mode to profitability mode at the drop of a hat. His advice is to know your “unit economics to break even,” or the amount of money you can spend on customer acquisition while still reaching profitability within a defined time period.

“If you have that math in your head, you know that, depending on the market, you can dial your acquisition costs up or down and manage your growth,” he says. Another general rule is to plan to reach profitability with at least one-third of your most recent funding still in the bank.

“Even if a future round never happens, the business stays sustainable,” Hsu says.

FROM THE NOVEMBER 2015 ISSUE OF INC. MAGAZINE
BY GRAHAM WINFREY

Staff writer, Inc.

#Leadership : People Leave Managers, Not Companies…People say Many Things about #Managers. But There’s One Thing I’m Willing to Bet you Never Hear. You Never Hear People say #Management is an Easy Job.

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“Here’s Something they’ll probably Never Teach you in Business School,”  “The Single Biggest Decision you Make in your Job—  bigger than all the  rest—  is Who you Name Manager. When you name the Wrong Person Manager, Nothing Fixes that Bad Decision. Not Compensation, not Benefits—  Nothing.”   – Gallup CEO Jim Clifton in the summary accompanying his organization’s 2013 “State of the American Workplace” Study

People say Many Things about Managers:  1- He’s too demanding. She’s too intense. 2- He’s a great motivator. Her team really likes working for her. 3- You can count on him. She gets things done. 4- He’s a terrific leader. She’s a real strategic thinker.  5- He doesn’t know what he’s doing. She doesn’t have a clue.

Develop an Effective Knowledge Transfer System

But There’s One Thing I’m Willing to Bet you Never Hear. You Never hear people say Management is an Easy Job.

After I retired from management in 2012, I wanted to step back and gain some perspective on what I’d been doing for the last quarter century. As I began to spend time with different organizations’  management and employee studies, trying to get a broader sense of the common issues managers were grappling with and how they compared with my own experiences, one inescapable truth struck me: Vast numbers of employees are disengaged. By “disengaged,” I mean not emotionally committed to the organizations they work for, and therefore in all likelihood not highly motivated and fully productive.

There are subtle differences in how different studies define  “employee engagement,” but the commonalities among the various studies are far more important than the differences. No matter how you slice the data, in the big picture somewhere around 60 or 70 percent of employees are simply not working—  say it  straight—  as hard as they could be. Let’s take some examples. Gallup data shows 30 percent of employees  “engaged.” Towers Watson data shows 35 percent “highly engaged.” Dale Carnegie data shows 29 percent “fully engaged.” And these aren’t small studies; the Gallup survey includes more than 350,000 respondents and the Towers Watson survey includes more than 32,000. Gallup goes on to estimate an annual cost in lost U.S. productivity of more than $450 billion. This is a staggering figure. Even if it’s imprecise, it gives a sense of the magnitude of the problem.

 

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continued of article:

What high-level factors contribute to this epidemic of disengagement? To return to the title of this chapter: “People leave managers, not companies.” In short, the central relationship between manager and employee plays a critical role. Beyond that, other factors also contribute. These include belief in senior leadership, pride in one’s company, and the chronic uncertainty resulting from a steady stream of reorganizations, layoffs and pressure “to do more with less.” But no matter the precise constellation of factors, which vary according to the character and circumstances of an organization, there’s no question that a chronically high level of employee disengagement represents both a failure of management and a fundamental challenge to it: a challenge to do what is needed to keep vast numbers of individuals interested in their work, feeling good about their organizations, and working as productively as they can.

What does this  high-level data mean to you as a manager? It means, first and hopefully encouragingly, that if you find the practice of management challenging, you’re not alone. It is challenging and you have a great deal of company. If 60 to 70 percent of employees are working at less than full capacity, an awful lot of you in management are dealing with motivation problems. It also means there’s a huge opportunity: an opportunity to better engage employees and improve productivity for your department and organization. To use simple numbers, if you manage ten employees and six of them are to some extent disengaged, and you can reach on average two of them to better engage and motivate them, those are immediately very significant productivity gains you’ll achieve.

Of course the challenge lies in reaching those two employees, understanding why they feel the way they do, and improving their mindsets. We’ll dissect these challenges and provide new tools to approach the old task of management in the pages ahead.

“Here’s something they’ll probably never teach you in business school,” wrote Gallup CEO Jim Clifton in the summary accompanying his organization’s 2013 “State of the American Workplace” employee engagement study. “The single biggest decision you make in your job—  bigger than all the  rest—  is who you name manager. When you name the wrong person manager, nothing fixes that bad decision. Not compensation, not benefits—  nothing.”

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The Type B Manager: Leading Successfully in a Type A World is available on many book-selling sites.

Following is an excerpt from my new book The Type B Manager: Leading Successfully in a Type A World, which is being published today by Prentice Hall Press. Publishers Weekly has called the book, “an excellent resource for leaders who don’t fit the mold, and for upper managers who need to fill leadership positions.”  This section, from the chapter “People Leave Managers, Not Companies,” examines the fundamental importance and challenges of a manager’s role.

 

Forbes.com | August 4, 2015 | Victor Lipman