We are “officially” entering a recession. That’s likely not a surprise to hear.
For SaaS companies, a recession is defined by a few things:
Churn increases (big time)
ARR growth decreases (big time)
Cash burn feels like bleeding out (big time)
Runway is king
You’ve probably read this same kind of advice in many doom and gloom posts over the last month or so.
But how do you turn these high-level truths into practical action?
I put together this Recession Planning Framework based on how I have seen the best SaaS CEOs leading through this crisis.
I hope that it makes planning during this uncertain time feel less like summoning a crystal ball and more like navigating with a map .
This framework is meant to help you develop the map so you can then focus on navigation.
Step up. Lean in. Be strong. Make decisions. Move forward.
5. THAT’S A LOT OF BOXES. WHICH ONE DO I PICK?
It’s a chess board. Not a dart board.
Every square is playable on a chess board. You decide which move is best based on your opponent’s move.
Here, your opponent is the recession.
Action item: populate every square like worksheet. Then define the signals you’d see in your data that would
trigger a move to a new square.
Last, most difficult step (by far): maintain discipline to follow through and make the move.
VS
6. GETTING THE RIGHT SET POINT FOR THE CHESS MATCH
No Economic
Impact
• 100% new ARR attainment
• No extra churn
Economic Ripple
(0-6 mos)
• 75% new ARR attainment
• 1.25x churn multiplier
Economic Recession
(6-12 mos)
• 50% new ARR attainment
• 1.5x churn multiplier
Economic Reset
(12-24 mos)
• 0% new ARR attainment
• 2x churn multiplier
Original Budget
• No change in spend/burn
Reduce
• Hiring freeze
• Reduce discretionary spend
• Prioritize new strategic initiatives
Refactor
• RIF
• Reduce facilities/rent spend
• Refactor GTM
Reset
• Additional cuts to reach CFBE
Too Aggressive
(you might die)
Too Conservative
(you might lose)
Just Right (but still hard)
7. WHERE ARE WE NOW?
No Economic
Impact
• 100% new ARR attainment
• No extra churn
Economic Ripple
(0-6 mos)
• 75% new ARR attainment
• 1.25x churn multiplier
Economic Recession
(6-12 mos)
• 50% new ARR attainment
• 1.5x churn multiplier
Economic Reset
(12-24 mos)
• 0% new ARR attainment
• 2x churn multiplier
Original Budget
• No change in spend/burn
Reduce
• Hiring freeze
• Reduce discretionary spend
• Prioritize new strategic initiatives
Refactor
• RIF
• Reduce facilities/rent spend
• Refactor GTM
Reset
• Additional cuts to reach CFBE
0% chance. Possible.
We are here today.
Somewhere in the middle.