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Building for the Future in a Down Economy

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In our last blog post, we discussed how companies can weather the COVID-induced downturn. But can there actually be growth during this pandemic? Even though the world feels upside down right now, companies can position themselves to grow in a downturn. During our recent roundtable webinar with three experienced investors we touched on how businesses can look ahead and plan for the future. The group stressed that companies should be thinking carefully before making widespread cuts and freezing spending because it's important to set a framework for growth when the economy rebounds. We've gathered three takeaways from the discussion:

Key talent is essential in preparing for market recovery

In crisis it is natural for companies to revisit their operational plans, but it's vital to do so with vision. According to Dan Goldsmith CEO, Advisor, Investor, and Board Member, companies that are trimming the fat should consider the risk of eventually cutting into bone. An interesting example that both he and Sarah Imbach, Angel Investor, Advisor, and Entrepreneur, shared is recruiting. Many companies are either putting hiring freezes into effect or slowing down hiring but this may be short sighted. If a company has the cash and needs specific talent to grow the business, now may be an ideal time to recreate the company's recruiting pipeline and bring in the necessary talent to scale in the right way when the market recovers. Sarah highlighted that this is a particularly unique market to scoop up technical talent and sales leadership, as these hires add to long term defensibility or long term revenue opportunities:

[The market has] been really competitive for technical recruiting for a long time. This may be a once in a five year opportunity to recruit technical talent. So if you have cash and you've been really struggling to hire specific types of talent, especially in areas like machine learning [and] deep tech -- individuals who are incredibly hard to find -- this may be the time to go get them. I would say the same around certain types of sales leadership. This is not an across the board reduction of headcount time. You [have] to be really careful about that.

The fabric of how we work may change on a global level

With many sheltering in place and working from home, it seems that this virtual way of working, while temporary, could have a lasting effect that should be considered when planning for the future. Dan Goldsmith shared:

I've heard many companies, not only in the software space [but also] in manufacturing and other spaces, talk about how shocked they are at the level of productivity from their teams working in a remote mode. That's not to take away from the fact that we miss being face to face and having that personal connection, but I think it is going to break down some of the barriers towards globalization with companies. In the software field, I work with tremendous teams and talent throughout Asia. Eastern Europe is one of my favorite places right now. [There's currently] an opportunity for organizations to think about talent even more broadly. If you can create more of that virtual fabric in the way you're working, take the things that are being effective right now, and how we're working during this time, and apply them in your culture on an ongoing basis. You're going to have access to a broader pool of talent -- top talent -- and you're actually going to create a better footprint for your organization, whether it be across North America or across the globe.

Secondary markets have companies that are well-positioned for growth

While the new work from home phenomenon blurs the continental divides, it's important to understand the cultural differences in approach to the economic crisis worldwide. Dan said:  

For a number of years now, I've worked in cities and centers throughout the globe. There are different personalities from an investing point of view. You're going to find different cultures of financial discipline, approach, and risk levels in those geographies. There are some really good secondary markets where you can find companies that are positioned well for growth, and are already operating with strong financial discipline and fundamentals.

Despite the turmoil and uncertainty, our panel agreed that there are strategic domains for investment in company growth right now. When the economy bounces back, prepared companies will have the edge.

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