How To Prioritise Budgets During A Bear Market

March 1, 2023

We can all agree that bear markets from a crypto project perspective are both ruthless and deflating, to say the least. But it doesn't necessarily mean we should just throw in the towel and forget about moving forward. It presents an opportunity to get creative and start thinking about how best to prioritise finances not just to survive, but to continue building.

Of course, the cornerstone of any budget is the tried and true “needs versus wants” methodology. Sadly, bear markets have a habit of making some of those hard decisions even harder. Cutting costs is obviously a must, so let's talk about where we can make the most impact.

First, let's focus on our wants: wants can literally be anything, from a new office chair to a subscription to some useful online tool. Frivolous expenses that contribute to the long-term success of the project, but don't necessarily bring in the *big bucks* right away. This could also apply to spending money on unnecessary influencers or advertising campaigns that don't always pay off. In bear markets, these are likely to be the first to go. For example, why would you waste money on a fancy billboard or put together an expensive event when no one is around to see it? Or more importantly, why do this if you can get better results by just doing some basic online marketing?

Even building a team or hiring professionals to work on specific parts of the project can be a luxury in bear markets. While it may be tempting to cut corners, you still need to prioritise those that will bring the most benefit to the project.

Next, let's take a look at our needs. These are the expenses that keep the project running, such as salaries, rent and other operational costs. These should be kept to a minimum and if possible, slashed altogether. There is no need to be paying for services that are not absolutely critical to the success of the project. The key to getting through bear markets is to focus on what really matters: the project. How can you make it leaner, more efficient and better prepared for the next bull run?

It's important to start from the basics and build from there. Bear markets can be a tough time, but they don't have to be the death knell of your project.

If you're starting out with a team, it's going to be important to find ways to stay productive. Communication plays a big role in forming your strategy and meeting your goals. Henry Ford once said, "Coming together is a beginning. Keeping together is progress. Working together is success." That's something to keep in mind, especially when you're starting out, as collaboration and teamwork can be integral to the success of any project. The work culture that you establish now could be the key to your project's success down the line.

If your project has outgrown the small startup dynamic and is ready to invest in non-essential services again, it's important to keep in mind the long-term benefits. It would be absolutely foolish to pour money into something that has no real return on investment. Employing even simple KPIs to measure the success of your expenses is always a good idea, as it will help you to keep track of what works and what doesn't. For a small crypto project, important financial key performance indicators could include revenue, sales/mints, ROI, cost per user acquisition, growth rate, conversion rate, staking rate, etc, depending on the type of project.

For example, you can start from a simple profit/loss statement and work from there. Track your expenses closely and compare them to your revenue to determine whether you're getting a solid return. This will help you to prioritise what's essential and what can be cut back, then you can continue adding different metrics into the mix as your project grows. After a while, you will be able to measure the costs associated with certain marketing campaigns, the amount of money you need to spend to acquire new users, or the cost per minted asset compared to the staking rate and the subsequent revenue, it can get tricky but it's definitely worth the effort.

Employing A/B testing in this case can also prove useful and help you to determine the best strategy for your project. A/B testing means making a couple of small test runs of two different strategies, to see which one works best. You can start small and test out different strategies for investing, marketing or even to help you build up your community engagement.

But even if you've really done your homework, unexpected things can happen and that's why crisis management is so important. Not all bear markets are created equal, and some can last much longer than others. So, you must be prepared for the worst, and plan accordingly. Build up a reserve of resources to ensure that you can keep operations running smoothly during a crisis, and build in contingencies to cover different scenarios.

It’s easy to get overwhelmed by the prospect of managing a budget during a bear market. But with the right strategy and some careful planning, you can be ready for whatever comes your way. At TONSMA we have the experience and expertise to help you navigate these difficult times, in our case, we've been through a few bear markets and can show you how to make the most of them, not only survive but thrive. Book a call with us just to say hi and explore how we can help.

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