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Dave Wangler, the CEO of TMW Systems shares his thoughts:

Most successful software companies rely upon a constant flow of new customers who are willing to dedicate their time and treasure towards achieving business improvement through the application of their technology. Finding customers to grow a business in normal times is challenging enough, managing in financial times like these where every headline drives a new level of volatility may require a different type of thinking.

Here are 3 things to think about – (1) Getting through the here and now, (2) Getting through the downturn, (3) Being prepared for the recovery.

Let’s start with the here and now. Whether you are an established player with margins that are the envy of the industry or a venture backed start-up striving to make it to cash flow positive, you need to begin by challenging every assumption about your current health. Start with your receivables – if you haven’t been trending your performance in this area, it’s time to start. Finding out that you’re in for a surprise when your average aging exceeds 90 days, is about 45 days too late. Cash and available credit line – treat every dollar like it’s your own and resist the tendency to draw down on your line of credit.
Sales pipeline and forecast – if your path to the corner office went through the sales ranks you may want to enlist the help of some of your management team to help you scrub the forecast challenging deals you normally would take for granted. After all, it’s not just software CEOs reading the Wall Street Journal, you have to assume that executives in every single prospect account are seeing the same economic news that you are and are battening down the hatches. The old simplistic sales management questions of “Why will they buy it?”, “Why will the buy it now?”, and “Why will they buy it from us?” will help you screen out deals that in normal times would be pulled in by your ace closer, particularly if you add one new one – “How can they buy it now?”.

Getting through the downturn starts with building a realistic top line plan. Unlike past downturns, conventional wisdom may not apply in terms of the depth or duration of this event, so you may find yourself adjusting the plan as you go forward. With a realistic top line plan constructed, you need to create a profitability target and set a plan to manage to it. Setting the target to be greater than or equal to your current performance might be difficult, but it will provide you with a measure of safety that you may come to recognize was the single decision that allowed you to survive. Managing to this profitability level will mean different things for different businesses but expense control should trump everything else. This doesn’t mean that customers should take a back seat – on the contrary providing sufficient value to your customers so that they maintain their level of investment with you is key. What it does mean is reviewing everything including your sacred cows e.g. marketing spend, partner programs, your third off shore development experiment, or perhaps that new international bet you thought might provide shelter from the bad “domestic” environment. It also means making some very difficult decisions about how to manage your largest single expense – the team you’ve worked so hard to build. There are certainly no easy answers and no single model, but the calculus of the CEO in crisis needs to be both broad and deep – the introductory course won’t cut it. In the event you chose to do a restructuring be sure to consider what the organization will look like after an action. A former colleague of mine once inherited a development team consisting of 10 directors, 8 of whom couldn’t code and one programmer. Choose wisely.

Being prepared for the recovery. Make no mistake, being a winner in the recovery will require more than just survival, although survival is a fairly obvious pre-requisite. For most management teams this will be a time where you will be much more “hands-on”. More hands-on with customers, more hands-on with your products and even more hands-on with those creaky systems you’ve put off updating. The key here is that if you planned to manage your profitability correctly you’ll have created a pool of investment dollars that you can “add back” into the business.
So rather than shipping your 40′ x 60′ booth that makes its own weather to the three big trade shows, which by the way will only be attended by vendors doing the resume swap two-step, consider sending a coupe of executives to network and invest the money in developers to push your product down its roadmap.

In conclusion here’s a quote from my old flight instructor – “All that runway behind us isn’t doing you much good, chop the power and get this thing on the ground, now!” In other words, take an objective view of the situation and act quickly to preserve your dry powder – those lights at the end of the runway are sitting atop a concrete barrier.