The Working World

Retooling: “Hibernate” Your Business

For a lot of companies, it’s going to be a long, cold winter — even as that winter turns to spring, summer, fall and back again. Instead of toughing it out with bridge-loan band-aids, fancy resource footwork or repeated promises to customers, one company bowed out without bowing out. In the CEO’s term, it went into “hibernation.”

In a story by Rafe Needleman on Cnet, Big Moving Pictures CEO David Knight laid out his predicament and his strategy: His company, which affixes cameras to military aircraft during air shows and displays the live feed on large screens to audiences on the ground, was about to launch last fall. When the market fell precipitously in September, he put things on hold.

To go into hibernation, Knight convinced creditors he was still good for his loan; talked nicely to customers about waiting it out with him — and found a clever way to keep his team together even as he was forced to stop paying them.

This employee strategy holds lessons for many companies faced with the dilemma of squeezed revenue and the need for human resources:

For key employees already participating in his company’s stock option plan, he kept them vesting on their normal schedule, even though he stopped paying their salaries. They thus remain, literally, invested in the company’s eventual success.

He also did his best sales job to convince them to take project-based contract jobs over full-time gigs, when possible, so he’d be more able to quickly get the band back together when needed.

He kept the company going in the background by ditching the office and switching his phone system over to Vonage. Employees’ calls are forwarded to their personal cell phones.

Knight is calling the whole event a “hibernation,” but it won’t last that long:

Knight believes he can keep BMP in stasis until the third quarter of this year. “It’s not about the cash,” he says. “But it’s a seasonal industry and if we can’t restart by then, we wouldn’t be able to execute by the end of the season.” Adding another year to the hibernation means another year of change, and erosion of customer and employee relationships. If the economy does not look like it’s coming around in about six months, he will consider a complete shutdown.

Read more stories on Recessionwire:

• Welcome Aboard, You’re Pre-Fired
• Redux: Will the Great Recession Bring a Music Revolution?
• The California Cobra
• Feel-Bad Movies for Feel-Bad Times

Tags: economy, Small Business Resources from OPEN, startup