An acquaintance of mine texted me last week, "It's the end of the world."
He invests in retail businesses.
I've had lots of tough conversations recently, but if there's a silver lining, it's that things aren't quite so bleak for most of my indie hacker friends who are running online businesses. Uncertain? Definitely. But for most, not immediately terminal.
After 10 years of good times, things are about to get rough. We're shutting down physical gathering places, not because those businesses are unsound, but because we need to in order to slow the growth of COVID-19. Despite the artificial cause of these closures, however, the effects are quite real.
When a business shut down, consumers can't spend money there, which means it doesn't generate revenue, which means it can't pay its employees (or its creditors… or its landlords), which leads to all sorts of cascading effects. This is happening to millions of businesses right now. The result will almost certainly be a recession.
During a recession, economic growth slows. Businesses and consumers borrow less, invest less, spend less, and consequently earn less (since one person's earnings come from other people's spending).
They're still spending, of course. They're just spending more discerningly.
Thus, your current and potential customers will be asking themselves, "Can I afford this? Is it worth it? Am I better off spending my money here rather than spending it elsewhere or saving it?"
To survive a recession, you want the answers to these questions to be "yes" for as many of your customers as possible.
You can boil down all of the questions above into one: "Am I getting enough value?"
As founders, our businesses work because they provide value to customers. Nobody cares about your features. They care about the value they receive, which may or may not incidentally be made possible as a result of your features.
Even if it's your mom buying your product and she barely understands what it does, she's doing it for value. It's because the ability to express her love and support for you is valuable to her. (Note: Providing value this way doesn't scale, unless for some reason you have lots of moms.)
This should be at the top of your mind as a founder. It should be at the heart of everything you build and every customer conversation you have, especially if you're in the early stages. If you don't quite understand what value you provide and why people buy, it's time to learn, and learn quickly.
But even that's not enough. Remember, your goal isn't merely to provide value to customers. It's to get them to answer "yes" when they ask themselves, "Am I getting enough value?" The difference is subtle.
It's quite possible — likely even — that you can provide immense value to your customers without them even realizing it.
What you need is to provide explicit value. It should be as easy as possible for your customers to draw the logical connection between how paying for your services will lead to them making or saving money, or some other massive benefit.
The best businesses that make the most money are great at this. For example:
Indie hackers frequently fall into the trap of creating things that solve unimportant problems, that provide very little value, or that provide value that's difficult to explain. If at all possible, avoid doing this. But if it's too late to avoid it, then bite the bullet and do the explaining.
You may understand your business perfectly, but that doesn't mean your customers do. They aren't mind readers. So you can't expect your customers to "just get it."
Similarly, you may have all the time in the world to think about your business, but your customers are busy people with lives of their own. You can't expect them to waste brain cycles trying to piece together the convoluted puzzle of how your business is valuable to them.
You need to explain exactly how you're making or saving your customers money, and it needs to be convincing, otherwise it's very easy to justify canceling my subscription to your product or simply never signing up in the first place.
In times of change, the things that people find valuable change. That means that you need to be perceptive, nimble, and decisive as a founder. You can't hesitate to change your messaging or even your product to match what customers need today.
There's a great example in my neighborhood, a burger business called Creator, whose burgers are created entirely via robots.
In recent weeks, they've realized something important: I don't just want a cheap, tasty burger anymore. No, what I want is a cheap, tasty burger that won't give me coronavirus. Delivered to my apartment. And I don't want the delivery driver to give me coronavirus, either. (I know, I know, I'm super demanding.)
For reasons related to me eating way too many hamburgers, I'm on this company's mailing list. Here's the email they sent me:
This email is gold.
I don't know how many restaurants in my city will survive the lockdown or the recession, but I'd bet on Creator's founders any day.
It's important to realize that none of this is new. These are basic fundamentals of business that were just as true in 2019 when times were good as they are today.
The only difference is that you had a little more leeway then.
Selling to rich, carefree, optimistic, undiscerning people is easier than selling to financially distressed, worried, pessimistic, bean counters. But that's who many of our customers are going to become over the coming months.
Understanding the fundamentals of how to build a great business is helpful in good times, but in bad times it's necessary. All the fluff gets stripped away, and you're forced to ask the tough questions, like whether or not you're providing explicit value to your customers.
But this is only the tip of the iceberg when it comes to surviving a recession.
I recently recorded an in-depth discussion with Amy Hoy about the topic. During the '08 recession, Amy built multiple online businesses which continue to thrive today, and she's one of the founders I've learned from the most.