A lot has been written about the financial crisis, and even more about what companies should do. The layoffs have begun; discretionary spending is being slashed, as plans are getting revised with an eye on cash conservation , and those with liquid resources are eagerly identifying potentially opportunistic acquisitions.
I attended the Venture Beat event on October 29 where these tactics were discussed at length by investors and by entrepreneurs. This kind of talk is very focused on process and doesn’t really convey the intense emotional issues that confront a CEO having to manage in this difficult environment.
Last week, we at ExpertCEO decided to try and put a human face on these discussions, so we polled our members to find out “what keeps them awake at night.” Not surprisingly, “running out of cash” was the number one response with 56% of respondents indicating that this was their worst fear.
Why is this so scary? Because the results that could ensue are far greater than simply the financial impact on the company. Many CEOs have spent years building a company and have a large percentage of their net worth, not to mention identity, tied up in it. The employees of these companies have families, mortgages, tuitions and careers that will be directly affected by these decisions. Running out of cash results in cascade of events–a complex process of laying off respected people who rely on employment to meet their obligations, letting down customers who may depend on a company or its product, and possibly acrimonious negotiations with investors, landlords, lawyers, etc.
Here are the results of the poll:
What keeps you up at night (check all that apply)
My own job security (4%)
Laying off employees/poor morale (34%)
Missing the sales forecast (43%)
Running out of cash (67%)
Nothing, I sleep like a baby (14%)
Which of these concerns you the most
My own job security (7%)
Laying off employees/poor morale (10%)
Missing the sales forecast (18%)
Running out of cash (56%)
Conclusions: The fact that so many CEOs are worried about running out of cash (and missing their sales forecast which is related) indicates the state of mind of our CEO member community. It also confirms their likely actions – cost reductions, layoffs, deferred purchases; with the resultant impact on the economy. This poll is just another piece of corroborating evidence of the financial crisis.