When the market turns, cash is what keeps you going
Originally written in Chinese. Translated with AI, reviewed by Gary. Read the Chinese original →
Lately, war and a weak market have made an already uncertain market even worse.
Last week I sat down with a mentor and a few startup founders. Everyone was in a different industry, but the pressure we described was strikingly similar. A used-car seller said that after the festive season, with fuel prices going up, many people have put buying a car on hold. Retail is even more obvious. Physical stores are getting harder, so quite a few offline retailers have recently come to us to ask whether there is an opportunity online.
Online is not the answer. At most, it is just another battlefield.
If demand is weaker, consumers are more careful and stock is turning slowly, moving your goods online won't make the problem disappear. Shop rent simply turns into platform fees, ad spend and shipping costs, and it keeps weighing on you.
Our own costs have been climbing too.
I'm told packaging is up almost 50%, raw materials roughly 20% to 30%, and shipping from China to Malaysia about 20% to 30% as well. Platforms raised their fees earlier too. Retail today looks like selling products, but a lot of the time you are really racing against costs.
Even the job market is sending signals. Some former colleagues who left last year have started coming back to look for work.
My mentor made a very practical point in that meeting: at times like this, the most important thing for a company is to keep as much cash in hand as possible.
When the market is good, companies compete on growth. When the market is bad, they compete on who lasts longest. You survive not because you tell the best story, but because you still have cash, and you still have options.
What a company should fear most right now isn't being slow. It is not seeing itself clearly. Unclear accounts, unclear inventory, no clear view of what to spend, what to stop, and which customers to collect from first. When trouble really comes, you find out the problem was never a lack of business. The cash ran out first.
So the harder things get, the more you need to go back to basics. Protect your cash flow. Get clear on your finances. Stop unnecessary spending. Find ways to collect faster. And start dealing seriously with slow-moving stock that ties up your money. Some things look like assets if you keep holding them, but they are really a burden.
If a customer is on credit terms, it can even be worth giving a small discount to get the cash back sooner. At this stage, cash flow matters more than profit on paper.
This is not the time to compete on who expands fastest. It is the time to compete on whose fundamentals are steadier.
Many people are looking for a way out. But the real way out may not be switching to a new channel right away. It may be tightening the company a little first, and keeping the cash.
Because at a time like this, cash is not being conservative. Cash is what gives you the strength to keep going.