On March 15, 2020, the whole island of Luzon, alongside some parts of the Philippines, went into full quarantine mode as a precautionary measure to control the rapid spread of COVID19 in the country. In a matter of hours, schools, businesses, government offices, and mass transportation went into a grinding halt. Because of the many unknowns surrounding the pandemic, everybody was obviously uneasy, confused, and unsure of what to do next. Everybody was in complete chaos.
This has been the biggest crisis, whether local or global, most of us have ever experienced in our lifetimes, so most of us had no clue what we should best do.
Our management team at Maroon was equally clueless and confused at that time. Although we have been running since 2014, we have only done so full time since 2016, making us essentially still toddlers in the world of tech entrepreneurship. What’s worse is that, we have been positioning and preparing 2020 to be our banner year. The year when we double revenues from 2019, increase profitability by 10x, and prepare us to unprecedented growth in the next 3 years.
Well, 2020 had other plans in mind, and like all other businesses in the world, we had no choice but to adapt. It is either swim or sink, and we choose to fight and die swimming. But what to do? Where do we start? After much introspection, brainstorming, bottles of Jack Coke and sleepless nights, we came up with the following “simple” 5-Point Plan (taking in inspiration from a Github post by Monolith Growth) that allowed us to transform the business “overnight”.
(1) Build a cash reserve by minimizing your non-cash working capital
One of the first things that I did upon the quarantine announcement by the government is to convene with our Finance Manager and assess the company’s financial situation: how much money do we have in the bank? how much do our customers owe us? how much do we owe our vendors? In this crisis, we figured that it is more important to have cash on hand and sacrifice profitability (in the short term at least) rather than be by-the-book but without cash to keep the business running. So we immediately updated our cash flow & P&L projections for the year and made multiple scenario simulations (we built 5 scenarios from worst case to business as usual case). From these simulations, we identified the most probably one given the trends that we are seeing, and we adjusted things on a weekly basis to see which whether our choice of scenario still makes sense or not.
We applied for (and got accepted to two) additional bank lines even if we still did not need them yet, just to make sure we have multiple financing options should there is a need for one. We converted from twice a month payroll to once a month, to save on administrative overhead and also to make sure we have ample cash everytime.
We negotiated with our vendors and customers for better terms in our receivables and payables, respectively, and we made the tough decision of not renewing our lease on our headquarters in Quezon City and convert to 100% remote work for the rest of the year (that turned out to be a genius decision, as it not only allowed us to save a significant amount of cash in the medium term, it also minimized the risk of exposure of our employees to COVID19 and saved them from the hassle of commuting during this crisis).
Given these changes (alongside many smaller ones that when added, were significant contributors as well), we have maintained a relatively steady cash flow for the duration of the year, allowing us some breathing room to focus on the other aspects of the business.
(2) Restructure your company around Marketing, Sales, and R&D
Now that cash is generally stabilized, we proceeded with the second, trickier bit of restructuring the company’s focus. Although a bit counter-intuitive for us in the beginning, we have eventually realized its genius. Because the market has greatly shifted its needs, wants, and quirks in a very short span of time, we needed to also quickly understand what those changes have been and adapt our positioning in the market accordingly. Otherwise, we will be left in the dark and be dogs barking up the wrong tree.
To accomplish this, we ramped up low-cost sales & marketing efforts, mainly through informal surveys of our current and past customers, as well as formal 3-minute surveys of C-level executives within our network. From those interactions, we learned that although custom software will still be needed by organizations (especially in the longer term), they simply do not have the bandwidth and resources now to invest. But what they need now are simple, low-cost, off-the-shelf solutions that they can use as accelerators as they transform their own organizations amid the pandemic. This resulted to our expedited efforts in firming up our partnerships with Google (we are now a Google Cloud Partner, one of a few in the country) and ActivTrak (we are their only active PH partner), providers of the world’s best cloud, productivity and employee monitoring solutions, respectively.
Lastly, we have also boosted our efforts on our internal Research & Development, prioritizing initiatives on reusable code components, CI/CD, and frequent user testing. As a result, we are now in a better position to deliver more software solutions (both as a service and as products) to our customers more efficiently and more effectively than before.
(3) Improve profit margin by limiting backwards integration and by outsourcing
Because the global economy has entered into a recession, with the Philippines seen to have around 10% GDP reduction for the year, more creative operations are necessary for any company to survive.
In Maroon, this has mainly revolved around tapping our vendor network for outsourcing opportunities, even having an outsource programmer out of Kenya working for us in a project. Word of caution though, as this effort has honestly been a hit-or-miss one since some of the partners that we have tapped were unfortunately low in quality and were a headache to manage.
Another improvement that we have introduced (although this effort has already started even before the pandemic) was to be data-focused, with dashboards and reports being central to our decision making across the departments. This has left the guessing game out of the equation, allowing us to make the best decisions not through hunches or gut, but through indisputable data.
(4) Reinvest into low-cost, high-value product or service offerings
Life has obviously become harder because of the pandemic, and obviously, software is a very expensive product or service to sell. If we wanted to survive and thrive amid this new economic climate, we needed to adapt our offerings with the current purchasing appetite of our customers. As mentioned in (2), this meant understanding what they need now, and realizing that low-cost products such as G Suite, Google Cloud, and ActivTrak are necessary tools for business owners and government agencies even with the pandemic as they need to empower remote, skeletal work forces to be productive.
In the services bit, we have also shifted our approach from fully customized solutions to accelerator-based ones. For instance, if a customer requires an e-commerce web application, instead of building one from the ground up, which can take a very long amount of time and massive amounts of capital, we help them get going first with a WooCommerce approach first. Although not good for future maintenance and upgradability, this MVP (minimum viable product) approach allows us to help more customers transform their businesses with a relatively lower financial investment. When things pan out well, and they have proven the model to work, then comes the time that we help them move from the MVP into a full-fledged application.
(5) Establish value-for-money perception through increased online marketing and advertising
After understanding the new needs and wants of the market in (2), and tweaking the company’s operations and offerings in (3) and (4), we then use sales and marketing tactics again, but this time in repositioning the company in the market and letting the world know of it. For us, this meant reinvigorating our social media channels (Facebook, Instagram, LinkedIn, and this blog!) and fine-tuning our messaging to target business owners and government agency ICT heads that our company is here to support them in navigating the difficulties brought upon by the COVID19 pandemic into their organizations through the use of technology.
This also meant regularly posting on social media, through tools such as HootSuite and Canva, updates about the company’s offerings, promotions on products and services, and encouraging information and messages. Assessing what our competition is doing on this platforms is also important to know whether we are performing worse or better than them in reaching the customers.
On to the Second Half of 2020
Today, almost 4 months into the pandemic, and we are very proud to say that the above “simple” and “overnight” 5-Point Plan has worked very well for the company, our employees, and our customers. We have gradually and consistently made the necessary changes to our business, and we are now in a relatively good financial position, our employees are motivated and with high morale, and our customers are generally pleased and happy with the service that they have gotten despite the challenge of COVID19. Our new and repositioned offerings (evangelized through our social media & traditional channels) seem to be working well too, with new business starting to come our way through them.
Even though nothing is for certain, especially during a crisis, we are very grateful and optimistic about what lies ahead of us. Things will surely be still very difficult, with much of the world still on recession for the foreseeable future, but as long as we stick with our plan, while continuously adapting with the changing trends and events, we that we will continue to fight, move forward, and march towards success against this pandemic!