From XU Magazine, 
Issue 23

Staying rational in the time of a pandemic

This article originated from the Xero blog. The XU Hub is an independent news and media platform - for Xero users, by Xero users. Any content, imagery and associated links below are directly from Xero and not produced by the XU Hub.
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In one of my undergraduate classes in economics I learned about how taxi drivers in 1980s New York managed their work on busy and slow days.  Interestingly, many had an internal “daily revenue budget” in their mind which was fixed irrespective of the circumstances.  On a busy day they would stop working immediately after reaching the budget and go home early.  On a slow day they would work very long hours trying to make the same amount of money.  Often, they would go home late, tired and frustrated if they made next to nothing.  This is clearly irrational, as it is easy to see that an opposite strategy results in higher revenue and better lifestyle: work long hours on a busy day, go home early on a slow day.

Surely, we all know that.  Or do we?

People have been shown to be surprisingly irrational at times, especially when stressed, and since these are stressful times for a lot of us, a little reminder of what rationality looks like will not hurt.  Here are a few insights I collected from some of our clients and fellow software entrepreneurs:

1)Throw out your 2020 plans – the budget, the hiring plan, investments – and start from scratch.  Put your entrepreneurial hat on and look at the opportunities

a) Is the product mix you are offering right?
b) Is your IT infrastructure fit for purpose?
c) What projects you always wanted to catch up on but never had the time to?

2)Stop flogging a dead horse

a) Enterprise sales inquiries are likely to remain subdued till the end of the year
b) Write-off 2 quarters of new sales if you are selling non-essential services

3)Focus on customer retention, not acquisition

a) Make sure you are good value. In the time of raging consumerism, that is, until very recently, it was all about “experience”, the wow factor, the packaging.  But on the face of it that time is not coming back soon as we, and our clients, prepare for the coming recession by scrutinising our own costs, from cutting on office space, replacing on-premise servers with the cloud and consolidating software infrastructure.  Looking expensive or ‘non-essential’ is not a winning strategy.  The survivors probably already endorse remote working with cloud only infrastructure and simple and transparent pricing models.
b) Be careful with price renewals – by upselling non-essentials or repackaging services just to increase prices.

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