Discontinue Negative ROI Activities

Immediately stop all sales & marketing programs that are not cash accretive.

I recommend: For marketing programs, Take a serious look at to make sure that they are all ROI positive. The ones that are not should be ceased immediately. For sales programs, for accounts that bring in less revenue than they cost (sales people full-loaded costs), should be renegotiated or terminated. In the current environment, you are be better off losing revenues in the short to medium term and conserving cash.

Stop Focusing on Product

Focusing on revenue rather than product. I'm sure this sounds antithetical to many start up CEOs. However, your VCs are focused on sales and profitability right now.

I recommend: Focus on revenue opportunities. This is probably not the best time to invest in the product unless you think that investment will pay off in revenue in the short term.

Reduce Headcount

Laying people off is the hardest thing to do but it's the most important as well.

I recommend: Cutting staff, cutting deep and cutting fast.  If you think you need to cut 10% of your work force, then cut 25%-30%. I've never been in a situation where I cut too many people. Instead, I've had experiences where my managers weren't bold enough and we ended up doing multiple layoffs in a short period of time. This was bad for morale, the bottom line and for the business. Keep the employees that actually "do" rather than manage. These are the folks who are on the front lines running the business day-to-day. People who make things happen, who work with the partners, vendors and customers.Hire contractors - although they may seem expensive, you don't pay them vacation, taxes or benefits and you can let them go without the guilt of not paying them severance. Use this opportunity to upgrade your team. See how you produce with a smaller team and if you have the luxury to hire again, there will be so

Renegotiate Contracts & Cancel Services

Almost any deal can be renegotiated in an economic downturn.

I recommend: Review every contract. Determine what your leverage is and how you can use it. For service providers that you no longer need, cancel them immediately. For early contract cancellations, negotiate early exits even if you have to pay upfront to get out. Explain to the partners that that they are lot better off getting something today then nothing tomorrow.

Know Your Cash Position

Keep a daily tally of your cash in the bank. Stretch out your payments to vendors, service providers and anyone else who can take it.

I recommend: Track uncleared checks, upcoming obligations, cost cutting expenses, etc. Extend payments to your accountants, lawyers, and anyone else who can afford to wait a month or two to get paid. Turn your payments into a net 60 or 90 payment cycle. Service providers can wait and you can increase your cash flow flexibility.