Scenario Planning for Economic Downturns

The market is cyclical. A good operator knows that a recession is a matter of "when," not "if." Scenario planning allows you to react fast because you have already made the decisions in advance.

The Bear Case

Assume revenue drops by 30%. What costs do you cut? Do you freeze hiring? Do you cut marketing spend? Write this plan down now, when you are calm. In a crisis, emotions run high.

Cash Runway

In a downturn, "Cash is King." Your primary goal is to extend runway. The "Default Alive" metric (Paul Graham) is critical: If revenue stays flat, do you run out of money? If yes, you are Default Dead. Fix it.

Investors love founders who present these scenarios. It shows you are a realist, not just a visionary.