Three principles for SaaS founders navigating a market downturn

Executive overview

When markets drop and valuations collapse, most founders react with denial or panic. Neither works. The goal is to make good bets on what you can control, not worry about what you can't.

Three principles structure the response: adopt a wartime mindset, control burn without killing growth, and find go-to-market upsides.

In uncertain markets, there are no good or bad markets — only good and bad bets.

Embrace the wartime CEO mindset

• Denial is the default reaction; resist it
• Wartime mode means staying prepared whether conditions improve or worsen
• Leadership is about creating certainty for your team inside an uncertain environment
• Ruthless vigilance on what you control; acceptance of what you don't

Control your burn

• Cutting everything is as dangerous as cutting nothing — both can kill the business
• Build three financial models: best case, likely case, worst case
• Scenarios give the team a concrete set of levers to pull, restoring a sense of control
• Review monthly; course-correct if reality moves toward the worst case

The 20% beat-down on vendors

• Go to every vendor and request a 20% reduction — discount, deferral, or renegotiation
• Vendors prefer reduced revenue over full churn, especially in a downturn
• Net-neutral impact: no layoffs, no go-to-market cuts
• This alone can meaningfully extend runway

Get ahead of churn

• Map every upcoming renewal and score each customer's churn risk
• Enterprise customers are generally stable; mid-market is riskier; SMB and solo users are highest risk
• Engage at-risk accounts proactively — give them a bear hug before they leave
• Churn forecasts feed directly into your best/likely/worst case models

People costs

• Many large-company layoffs are opportunistic cost reduction, not distress signals
• If headcount exceeds what the current growth trajectory justifies, a reduction may be necessary
• Use natural SaaS ratios as a benchmark for whether you're over-staffed
• This is the last lever to pull, not the first

Find go-to-market upsides

• Re-evaluate your ICP: smaller or riskier segments may need to be deprioritised; moving up-market can increase deal stability
• Adapt your messaging: buyers are thinking differently about budget and risk — your narrative needs to reflect that
• Cut unprofitable acquisition channels; double down on what is already working
• No experimental bets during uncertain periods — run a tight, proven playbook