3 Scenarios Facing Every Entrepreneur Right Now

Every entrepreneur’s business is different because every market is different. Regardless, early-stage and small businesses fall into one of these three buckets.

1. Worse case: Your market evaporated. Your customers have left the building, and you don’t know when or if they will return.

2. Best case: You are in the right place at the right time. All you do is take orders and ship products. Customers are now calling you. Perfect timing is the most beautiful business experience.

3. Most likely case: Your market has slowed considerably. There are new deals, but they are hard to find. At a minimum, your customers are taking a lot longer to make a decision. Deal velocity is a trickle.

Scenario 1: Worst Case

In the worst-case scenario, the entrepreneurs are doing all they can to survive. They are using all of the cash conservation methods they can think of while actively pivoting to a market that will buy right now.

I know startups in the sports business. Great business when there are sporting events. Right now, not good. And they are not alone. Other businesses find themselves as a solution in search of a problem—a classic death spiral for startups. 

These entrepreneurs have cut, cut, cut their expenses to almost nothing. Maybe even down to the key founders, meaning not all the founders, and product developers. The only money they are spending is to improve the product and keep their brand in front of the buyers who will hopefully return. 

Scenario 2: Best Case

The entrepreneurs in the best case scenario are sitting pretty. Their customers need them like they never needed them before. Cash is coming in the door from the best and least expensive source out there—customers. Because of this, angels and VCs want to invest right now. It is so good. These entrepreneurs can pick and choose who they want in their deal.

I’ve advised an entrepreneur who is in the health monitoring business. He sells to large cardiac physician groups. Before the COVID-19 breakout, he found himself being more of an evangelist for this service than a salesperson. Now he has physician groups he’s never talked to calling him. And they are buying in significant numbers. 

Quickly scaling is a challenge for these entrepreneurs. They are anxious because they want to be in every deal that’s going down in their market. They must spend every dollar, including their PPP and any investor money, on marketing and sales. Go big or go home!

Scenario 3: Most Likely

Then there is the rest in the biggest bucket. The customers are still there. You are still relevant. But your customers are confused and not buying right now. They want to get more clarity on how all “this” will work out before spending money.

But the entrepreneur...

• Knows this market. 

• Knows the problem. 

• Knows they need to solve it now. 

• Knows they will buy. 

So they are using the PPP money as a bridge to a normal sales cycle. Time will tell. This you can count on. 

If the customers don’t come back and buy when you expect, adjust your expenses to match your revenue. You are in it for the long haul. 

In the end, there are only two choices.

1. Spend your way out of this economy.

2. Save your way through to the recovery.

Choose now. Get more data. Choose again. With the PPP you now have time.

Godspeed!