Why "Trading Down" All Your Expenses Can Be a Risky Strategy for Growth
Why "Trading Down" All Your Expenses Can Be a Risky Strategy for Growth
Cash is getting tighter, Boards are warning executives, and everyone has gotten the memo that they need to be doing "more with less."
There are just a few things wrong with this story:
1 - You cannot cut your way to growth.
After a few spending cuts, you still have a large hole in your topline activity. You are just taking on a little less water.
2 - You cannot cut your way to product-market fit.
Even if you are spending less, your marketing and sales approach still needs to get more impactful. This is true in B2B eCommerce, B2B SaaS, and B2C.
3 - "Trading down" often means you are spreading your bets too thinly by trying not to make the hard decisions. "We can do both" if I choose a cheaper vendor for both things!
Instead, think about these things:
1 - Don't you want the best and brightest vendors and partners working on your most important priorities?
2 - Haven't you observed in your career that the top 5% of employees are 2-3x as productive? Why wouldn't that be true of your partners as well?
3 - Are you better off deferring a priority altogether than doing it in a way that's poorly resourced?
I'll leave you with one point. If you find yourself in trouble, the only question on your mind should be this:
"What is my differentiated transformation plan that will ensure we resonate in the market for years but respects our current capabilities and constraints?"
Put another way, if declining cash means doing less of what you're doing in the same way you're doing it, then you are likely starting your death spiral.
If you use constraints as a way to be creative and thoughtful about your business's path forward, you could look back on this time as the best kick you needed to get motivated.
