Technology Companies Continue to Hit the Headlines
The recent headlines continue....
US VC valuations continue to slump
Fund raising has slumped in 2023
Pressures from lack of capital (cash)
Technology companies, venture backed and bootstrapped, continue to feel the pain of the cash crunch and concerns about a slowdown. Additional cash is only available to limited portfolio companies and even those are told to tighten the ship. Layoffs have continued in the second quarter of 2003. The only way to survive is to cut expenses and for technology companies that means to lower headcount.
This is yet another cycle. It was a comparable situation in 2000-2002(dot.com), the 2007-2008 recession, and the COVID-19 recession from 2020-2021. We may be in another one in 2023.
The point? Recessions for many reasons happened and will continue to repeat. The companies that are prepared, survive and excel in good and troubled times.
One of best ways to be prepared is to have a good cash forecasting process. Cash is obviously critical, and a good forecasting process means forecasting cash for the mid-term (at the weekly level). Why? It forces the management team to understand the detail of the operations. KPIs and monthly budgets are great, but they will not show you if you are running out of cash or below plan in the next 90 days.
Read More: Cash Management Best Practices Part 1
Some companies jump into weekly cash forecasting when times are tough, and the cash balance is low. The best practice is to be always forecasting. Why? Check our previous blogs to find out!