Being in New York, it is hard to escape the realities of the ailing financial sector. When I took the train into the city this morning I could see the somber look in people's eyes knowing what had just happened to Lehman Brothers and the uncertainty of the financial markets and economy. Given this state of play, it is clear that capital is becoming scarcer by the minute and that we don't know when we may come out of this mess. The mantra for most businesses is to just wait and see rather than make any real decisions, especially when that requires a commitment of capital. Then I get an email from Bill Morrison at ThinkEquity today outlining his views that we are in Phase II of a Media Recession:
In our experience, media recessions typically develop in three phases. First, marketers reduce spot market activity and eliminate quarterly budget flushes. Then, marketers begin canceling "up-front" commitments and previously signed advertising contracts. Lastly, marketers begin to rationalize/reduce budgets for future years. Our research suggests that we entered phase two of the current media recession during 3Q. Our recent conversations with online publishers revealed a significant number of advertisers that have cancelled contracts or significantly reduced commitments for the second half of 2008. The majority of industry contacts we spoke with this quarter said fundamentals weakened from 2Q to 3Q.
Trust me, I am not a doom and gloom guy and on the contrary believe that now is a great time to invest and build for the future. That being said, it is also time to be smart and highly efficient. It is a great time to look internally and think about your priorities, your processes and whether or not you can do things better.
In this backdrop, I had a couple of board meetings last week and as you might have guessed, one of the recurring themes was needing more resources. While the companies were quite different, I seemed to be in the same meeting with each department head giving an overview and goal tracking from the previous quarter and each presentation ending with, "I need more resources." It's not that I am against hiring more people for portfolio companies, since I am all for it. My only point for all entrepreneurs and managers is that when you put together the hiring plan to make sure you think about the fact that you should always be under resourced and have more things to do than can get done. What this really means is that you have to do an incredible job of prioritizing your goals. Always ask yourself how you can do more with less and you will find that you and your team will become incredibly resourceful and stretch your dollars a lot farther than anticipated.
Speaking from experience, I have repeatedly seen situations where managers ask for additional hires, we tell them to wait a quarter, and then they miraculously are able to manage for the quarter. In fact, I was joking at one meeting the other day saying that it was incredible that we had half the staff from a year ago and have more revenue today that we did before. If we cut in half again, I mused, perhaps we could grow even more. OK-that is quite extreme, and we did agree to end up hiring a few more resources in various departments. What really struck me was the fact that when we hit the wall over a year ago everyone thought we weren't going to be able to make it and grow our business. What changed was that management became maniacally focused in prioritizing opportunities, not chasing every customer, being ruthless about how they spend their time, and consequently reengineering a number of their internal processes. We are now a much healthier company with a better operational platform that merits more investment. While I am not advocating that you starve your business and recognize that every company is different, I am suggesting that doing more with less is a mantra that you should subscribe to regardless of the economic environment and that in the long run it will yield tremendous results for you.
