Business Savings Account — How Long Can Your Cash Last?

Stash Your Cash (20 Month Plan)

There is a lot going on right now. 

Today I am breaking down a few concepts and outline how we are thinking through each. 

First is the “Domino Effect” which we are starting to see right now and will continue to experience. 

The domino effect: 

  • Starts with restaurants or businesses closing
  • Then effects rent and landlords
  • Continues on to have further downstream effects

How do you prepare for it? 

At Sumo Group we cut our Facebook and Google spending by 30% immediately. Right now the focus is to “stash cash” and be ready to “sustain and gain”. (cliche, but kinda catchy?) 

The domino effect on revenue might be lagging so take necessary precautions now. 

 

Next is the “Rubber Band Effect” which relates to spending.

  • Government is pulling so hard to put in money to stimulate the economy
  • But people are afraid and holding onto rubber band and not willing to spend money right now

This may not last long. But maybe it will.  The previous recession in 1929 had effects for 20 years.. 

If you can sustain right now, you can gain later. 

If you’re a landlord, how will you get your place rented out? If you depend on ad revenue, how will you adapt? 

 

Andrew Chen of Andreessen Horowitz, is saying to have cash for 20 months in your business.

At Sumo Group our assumption is that revenue is going to drop by at least 40%. We also are trying to keep at least a 5 to 15% profit margin. 

If your business went down 40% today. Are you prepared? 

We’re also encouraging a “One Company” mentality with everyone in the company. This gets everyone on the same page thinking how can we increase revenue and/or cut costs?

We believe the future will have more people working from home and working online. They will want inexpensive tools to help them so we are focusing on that. 

For example, instead of overpriced Mailchimp or ConvertKit they can get SendFox.

 

Two words that matter right now.. IF and WHEN.

IF things change and get worse, are you prepared? 

WHEN the economy recovers, where will you be? 

Recession proof your business, stash your cash, adapt and stay strong. 

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