55 Percent of Tech CEOs Were Not Prepared for COVID-19 Economic Downturn

55 Percent of Tech CEOs Were Not Prepared for COVID-19 Economic Downturn
Depositphotos

As of March 2020, 55% of tech CEOs had not begun preparing for an economic downturn, according to a recent survey by Gartner. With tech companies globally now facing the economic impacts of the COVID-19 pandemic, measuring cash burn rate over time can help tech CEOs calculate a company’s financial runway and assess its ability to survive the current recession.

Gartner’s 2020 Tech CEO Survey was conducted online between December 2019 and February 2020, as the initial wave of COVID-19 cases were being reported across the world but before it was declared a global pandemic on March 11. The survey was conducted among 285 respondents in North America, Western Europe and Asia/Pacific with the title of CEO or equivalent, at organizations operating in the high-tech industry with an anticipated annual revenue for 2019 of up to $250 million.

“While the survey found that 43% of tech CEOs were worried about an economic recession impacting their revenue growth in the next 12 months, many delayed taking action to prepare for this eventuality,“ said Patrick Stakenas, senior research director at Gartner. “As funding and available capital becomes scarcer in the weeks and months ahead, even after the COVID-19 outbreak slows down, tech companies will have to survive off existing customers and cash in the bank while the current market persists.“

As current economics continue to threaten short- and long-term revenue for companies worldwide, tech CEOs must take two immediate actions to calculate financial runway and determine a strategy for survival. Gartner suggests that they should use cash burn rate to calculate financial runway and determine critical actions for survival.