Enterprise Sales in a Recession

Matt Wichrowski
4 min readApr 7, 2020

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Photo by Adrien Olichon on Unsplash

The world has been shaken by the global COVID-19 pandemic, which makes it a difficult time to be a startup. As a founder, you must safeguard the survival of your company and position it for advantage when recovery begins. Although the scale and speed of this pandemic is unprecedented, the economic impact will likely mirror past recessions.

The COVID-19 impact seems particularly acute for early stage enterprise startups, but there are time-tested tactics that can ensure success. This post is a synthesized version of guidance we’ve been providing our early-stage, enterprise portfolio over the few weeks. Having worked and invested through previous down cycles we are confident that in times like these, this is what great looks like.

Accept your new reality

Startups that serve large enterprises are familiar with organizational inertia. They wrestle with long sales cycles, bureaucratic processes and slower initial growth. But with proper investment and patience, that inertia gives way to large contracts and corporate buy-in. We expect enterprise startups will face a very different market than what they’ve so far seen. In the looming recession client budgets will be frozen, corporate champions will be let go and contracts will be renegotiated, delayed or cancelled outright. Ignorance to this grim reality may be a temporary comfort but it will only call your leadership into question.

Extend your runway

Hundreds of blog posts and tweetstorms have all echoed the maxim “cash is king”. Your first priority as a CEO is to ensure your company doesn’t run out of money. We strongly recommend every founder take the required actions to ensure you have at least 18 months of runway assuming no revenue at all (if Seed or Pre-Seed stage). It’s much better to plan for the worst and hope for the best.

Always be nurturing

It will be much harder to close deals as projects stall and costs cut. Reframe your teams’ performance metrics from deals won to relationships deepened. Specifics targets will depend on your business, but we recommend a 2–3x increase in communication with your existing customers vs. your normal cadence. Focus on how customers are feeling and how their company is dealing with the economic climate. Downcycles like this can have a transformational effect on corporates. Business objectives may end up very different than they were before the pandemic and risk tolerance will almost certainly be higher. For the time being your team needs to switch from a hunter to a gatherer mindset.

Find more champions

Enterprise sales playbooks may differ in approach, but they share one common underpinning: relationships are everything. Most early-stage enterprise startups heavily rely on their client champions to evangelize your product internally and overcome procurement inertia. Those champions can do little good if they’re furloughed and with a recession looming, you have to assume every customer of yours will be forced to reduce staff. To the extent possible, you should form multiple bonds across your key accounts to diversify away “champion loss risk”. A good target is 5 people that you’re confident would return an email.

Communicate your survival

The risk of a startup dying is a major obstacle in most corporate sales cycles and even more so now. Make sure to let your customers know you’re still alive and positioning for the recovery. Clients are looking for confidence that you’re there for them, which requires you to be operational. Some of our competitors will die off with most due to poor planning. Make it clear to your clients that this will not be your fate.

Don’t freeze time

It does no good to survive this recession only to reach recovery in a zombie state. It’s extremely unlikely that you’ll be able to raise your next round of financing with 12 months of no progress. Series A investors will be slower in deploying capital and more selective of what reaches their bar. They want to invest in momentum so you must maintain that within your company. Revenue growth may be unlikely but there are many ways to demonstrate traction (product development, data capture, usage, etc.). It’s key to ensure your understanding of client needs remains accurate (see Always be nurturing). You don’t want to spend two quarters building a product for a client who has drastically changed priorities.

Remain positive

Remember that like all recessions, this will end. While it’s important to be honest with yourself and your people of the situation you face, it’s also important to maintain optimism for the future. The recovery will come and when it does you’ll need a motivated workforce to dig in and capture growth. We strongly recommend all founders to invest in culture during times like these. There are a number of fantastic all-remote resources available and I’ve listed a few of our favorites here:

  1. Digital Working: COVID-19 by LocalGlobe
  2. How to build culture in a remote team by Zapier
  3. Remote Team Field Guide by FirstRound

Thank you to Jon Folland, Freddy Kelly and Sharam Mossayebi for their support in writing this post.

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