Not necessarily. As a CEO, you suddenly see your sales plunge. You run the numbers and think: is it just a panic/fluke? Is it going to bounce back? Are we losing the sales to a new competitor?
You eventually conclude that the drop is due to a market downturn. You realize that you have a runway of 1 year, and cannot raise more capital. Se, your choices:
1. You keep cruising like nothing happened. The sales may bounce back within a year (in which case it was a good decision). They may decline further 6 months in (dropping your runway to 3 months). Or they may stabilize at the new level for a while (so when the runway reaches 6 months, you think again).
2. You fire X% of the people. Your runway is now Y years. If the sales bounce back earlier, it's a hassle to re-hire, but is doable. If the cooler market lasts longer, you may need to reiterate.
Making the correct decision is always a guess. Like trying to figure out whether to buy or sell a stock. You observe the market, you try to understand, and then you decide.
As a CEO, if someone asks you on the spot "are layoffs planned", any answer rather than a complete denial will be treated as a "yes": people with better offers will leave, other will start looking for jobs. If in a month the sales bounce back, you lost your bet.
Not necessarily. As a CEO, you suddenly see your sales plunge. You run the numbers and think: is it just a panic/fluke? Is it going to bounce back? Are we losing the sales to a new competitor?
You eventually conclude that the drop is due to a market downturn. You realize that you have a runway of 1 year, and cannot raise more capital. Se, your choices:
1. You keep cruising like nothing happened. The sales may bounce back within a year (in which case it was a good decision). They may decline further 6 months in (dropping your runway to 3 months). Or they may stabilize at the new level for a while (so when the runway reaches 6 months, you think again).
2. You fire X% of the people. Your runway is now Y years. If the sales bounce back earlier, it's a hassle to re-hire, but is doable. If the cooler market lasts longer, you may need to reiterate.
Making the correct decision is always a guess. Like trying to figure out whether to buy or sell a stock. You observe the market, you try to understand, and then you decide.
As a CEO, if someone asks you on the spot "are layoffs planned", any answer rather than a complete denial will be treated as a "yes": people with better offers will leave, other will start looking for jobs. If in a month the sales bounce back, you lost your bet.