Even with over 20 years of experience in finance, Catherine Birkett, chief financial officer of payments platform GoCardless, did not expect the change in the economy to be quite as dramatic as it is. Her experience through previous recessions — she started her career in the mid 90s, experienced the dot com bubble, and again the recession in 2007-2008 — puts her in the perfect position to help startups understand how to prepare for the economic downturn. Here are her top tips:

Understand your cashflow and cost base

Understand where you’re spending money. If you haven’t got a deep analysis on your numbers, do that right now. Then, as a management team, come up with a strategy of where you can cut costs if growth slows. Even if growth continues, you don’t have the certainty you will be able to fundraise in six months so you need to plan for that too. I’m definitely thinking about a downturn period of anywhere between six to 24 months, where things are going to be more challenging than they’ve been in my working career so far.

Plan for a range of outcomes

– and for the worst case outcome that, realistically, could happen. It doesn’t mean you action everything in that plan, nor does it mean you will be saved, but when you see indicators that things are going to get challenging, you know what your next steps are.

Reduce burn rate

Although everyone thinks this means firing everyone, I don’t believe in reducing staff numbers unless you genuinely have overinvested in a particular area. Drastic cost cutting like that makes it difficult to rebuild the company — you also create a fearful environment and lose trust.

The first things to look at are discretionary spending and where you’ve got potential pockets of overinvestment. Look at SaaS costs —  there are lots of different tools that somehow end up being in an organisation that don’t necessary get used much.

Push your suppliers for savings. This is going to become much more commonplace like it was in 2007-2008. Renegotiate yourself out of original deals — everybody’s going to be in the same boat and they’re going to want to keep your business.

If you were about to recruit, ask yourself if you have enough cash available to run this business long term. Slower growth for the next two years will mean you will be around in two years time and able to recruit more.

On the flipside, being able to make sure you can collect cash from people is key — customers will be trying not to pay to manage their own working capital. You want to make sure you know money is hitting your bank account on this date every month to manage your own cashflow.

Create a more cautious plan for your next raise

Never leave raising funds until the last minute (although saying this now is probably a little bit too late). You should always have at least six months’ runway — ideally more than that.

If you had planned to raise in 2022, you should either be thinking that that option is gone or that you’ll raise at a down valuation. You want to have a plan B fund have 12 to 18 months covered if possible. Get previous investors to set aside some money you can use if needed. You can also speak to the bank or consider venture debt. It’s a much better option to go out and raise money at a down valuation than it is to go bankrupt — many successful businesses have raised at a lower valuation and have come out the other side. You will have to deal with the fact that this means employee options are going to be underwater for a significant amount of time. Your role is to reassure the team that this is to protect the long term value of the company.

Go into fundraises with a more cautious plan than you would have done six months to a year ago. You need to show a path to profitability, levers you can pull to reduce costs if revenue doesn’t meet it, a slower hiring process and just more conservative projections. It’s a different mindset to a year ago.

Speak openly to employees

You’ll have to have a conversation where you say ‘hey, this is a different world now and it’s not going to be the same. We’re going to have to work together to get through this. Perhaps some of you’ve experienced big pay rises, bonuses, and lots of nice things in the working environment but there will be a little bit of pullback as we enter this new environment. There may be lots of jobs out there but we are planning on being here for a long time and we will see growth times again soon, we hope.

Anisah Osman Britton is coauthor of Sifted’s Startup Life newsletter, which comes out weekly on Wednesdays. Sign up here.