5 ways software companies can thrive in economic uncertainty

Running a software company in uncertain times is like driving in a thunderstorm. The first drops of rain may cause you to slow down, turn on your windshield wipers, and look around for a safe place to pull over. But once you assess the situation, you may realize that your car has new tires, your windshield wipers are working properly, and you can continue on to your destination. However, if the storm gets too bad or if you are not well prepared, you may have to stop.

As software leaders deal with market uncertainty, they are tasked with tackling similar challenges on a larger scale and understanding whether their business is capable of moving forward or whether they need to slam the brakes. In an environment like this, determining the right strategy is critical. Here are five factors every software manager should consider when evaluating their business strategy in today’s macro environment.

Understanding your software company

While leaders can get away with a hands-off approach during periods of growth, they must be unwaveringly diligent during market volatility. Executives who are thoroughly familiar with every aspect of their business are able to take quick and decisive action when time is of the essence.

To gain a detailed understanding of your people, your products and your market, systems must be put in place to relay critical data and information. Dashboards with real-time updates on key performance indicators are a good place to start, but the best business leaders go even further. Knowing the top performers on each team, recognizing the customer relationships most at risk, and understanding the financial position of your competitors are all examples of the granularity that executives should strive for.

Prioritize what matters

A better understanding of a business paves the way for informed prioritization. Tough times require agility, and the leaders who successfully adapt to changing circumstances do so by understanding what should be prioritized and what should be put on the back burner. There is a tendency to set cost reductions or increases at a certain percentage across all functions of an organization, but that is not always the right approach. A priorities-first approach produces better results and is often an opportunity to make long-term strategic pivots.

appreciate grit

When companies face challenging circumstances, executives must be willing to roll up their sleeves and make an effort. Making tough decisions and steering an organization around obstacles requires innate toughness and an unwavering spirit – perseverance. As we exit a cycle of capital abundance and record growth, an entire generation of leaders still faces real challenges. Those with inner perseverance will not only face the challenges ahead, they will equip and empower their team to do the same.

Leaning on your network

Even the most experienced software company CEOs rely on their networks for ideas, advice and outside perspectives. Having a trusted circle of advisors who understand the business of enterprise software is critical to successful leaders in the field, especially in dynamic market conditions. Building a network of peers and mentors takes a lot of work, but cultivating relationships opens the door to sharing invaluable knowledge.

Identifying M&A opportunities and taking action

While the reflexive response when circumstances change is to get on the defensive, the best leaders proactively identify growth opportunities. For example, tightening available capital and financing tends to limit options for smaller companies, creating merger and acquisition (M&A) opportunities for stronger players. But leaders can’t sit around waiting for prospects to pass by their desks. They must be ready, willing and able to go out and find them.

Some of the world’s largest software companies have emerged from crises bigger, stronger and more dominant than before. Leaders who know their organization and have the courage to make tough decisions can take action, seize opportunities and ultimately build stronger and more resilient businesses.

Robert F. Smith is the founder, chairman and CEO of Vista Equity Partners. Visit his personal website to learn more about him philanthropic work.