Managing Corporate Earnings in Times of Crisis

I’ve built companies through 3 major recessions, including the Great Financial Crisis. I've seen the collapse of Bear Stearns, Lehman Brothers, and many others. If Trump doesn't change course, that is where we are headed... So, how should we react now that the US is reshaping the global economic order and triggering a self-inflicted recession?  The playbook for navigating the new tariff regime is straightforward. The fundamental characteristic of this new world is uncertainty. And Profitable Efficient Growth (PEG) is the proper antidote to uncertainty. Here's how executives can successfully navigate the next 9 months (broken out by MACRO, BUSINESS and MINDSET lessons): MACRO 1. Review your supply chain and understand component pieces and what exposure you have to various suppliers and customers. 2. Review your customer base by geography and understand your exposure, not just for tariffs but for retaliatory behavior impacted by country-specific animus. 3. Understand currency exposure and estimate impact of dollar-denominated contract erosion. BUSINESS 1. Improve the frequency of your forecasting and ensure you’re forecasting cash, expenses and revenue on at least a monthly basis. 2. Develop a clear POV on fixed vs variable costs and leverage non-FTE hiring for maximum flexibility in case things go poorly. 3. Review your messaging to illustrate why your product is essential in a downturn. Enable your Sales and CS teams with talking points so they can lean into price and budget when the objection arises. 4. Make growth investments but ensure they're tranched. Avoid more than 2x-ing any growth investment. Layer in 1.5x investments, monitor for performance, and then invest again. 5. Ensure you're not over-extended. Leaning too far into growth on the expectation that things will go up may create financial jeopardy later this year. MINDSET 1. Leverage healthy mindset practices to ensure you remain calm and clear including meditation, exercise, and visualization. 2. Understand: Every crisis is an opportunity for the confident and those willing to lead. 3. Pause and ask yourself the question, “How is this a huge opportunity for our business?”. Journal what comes to you from a focused session. 4. Project clarity and confidence to your team. Let them know your organization has intentionally been designed to weather storms like these. We just got out of the post-COVID tech recession. These lessons should be fresh in our minds but they bear repeating. The folks that lectured us that we should stop thinking about margins and profitability were premature. We all need to be smart, responsible and prudent. This doesn't mean fearful. And this doesn’t mean we shouldn’t try to grow. But it does mean it’s not the time for foolishness. We need to understand our market and our exposure. We need to design our businesses for anti-fragility. Our bets need to be sized. And we need to find the opportunity in the chaos.

5 years ago our company almost died. In the span of a month, we lost nearly 70% of our revenue, as global air travel slowed to a trickle. Many companies in our sector did not make it. Here is how we survived . . . and hopefully some tips for other entrepreneurs in the future facing crises. 1). Know what matters most - and what drives it . . . Beyond taking care of our employees (which I discussed last week), what mattered most for the company was preserving cash. Within the first week of lockdown, I put together a very high level driver tree outlining the primary levers to preserve our cash. Many folks I speak with are worried that such an exercise is not going to be 100% correct, or that they can't estimate accurately the specific values of each bucket. That's not the point. I put together the "high level plan" knowing that while I probably missed a few things, I had roughly 80% of the levers correct. In a crises, this was good enough to get started. 2). Cut quickly and strategically Once we had a plan on paper, we had to move fast. Every day that we did not, we were burning precious cash and further jeopardizing our future. We identified our largest cost buckets, and set a savings goal. This did absolutely mean some very tough decisions with respect to a few team members, but we handled those consistent with our values and did not leave the individuals impacted in limbo. 3). Even in the darkest crises, opportunities may exist While our traditional business - a post-booking RM platform relying on high demand - was extremely challenged during the start of the pandemic, we kept our eyes and ears open to new opportunities with our existing customers. We tried to find ways that they could repurpose existing products for the current challenges that they faced. We also worked with them to solve new challenges brought on by the COVID disruption. Being flexible in this manner kept revenue flowing - revenue that would be vital to the survival of our company. 4). Do the legwork to get help. We benefitted from small business assistance programs set up by the US Government - without these we might not have survived. Holden C. deserves a ton of credit for pulling together all the PPP paperwork and dealing with the banks to get these applications in on time 5). Plan for the future We understood the dangers of focusing too much of our efforts on present-day survival. We dedicated a portion of our time preparing for the "post-Pandemic" world, thinking through how our tech stack could be most relevant. This strategy worked. We not only survived, but closed our Series A during the pandemic. Today the company is multiples larger than we were even at our peak pre-pandemic. COVID nearly killed us. All entrepreneurs will face existential crises during their journeys. Before going into "reaction mode", take a moment to plot your strategy. Then get to work. #entrepreneurship

In times of market volatility, inflation, geopolitical risks, and supply chain disruptions, CFOs step into dual roles as crisis managers and strategic leaders. To navigate these turbulent waters, proactive strategies that combine robust risk management and agility are non-negotiable. Here’s how CFOs can mitigate risk and seize opportunities: 🔍 Scenario Planning & Stress Testing-- Prepare for uncertainty by simulating financial scenarios, from moderate market downturns to severe shocks. ✨ Example: Analyze the impact of a 10% revenue drop or a 20% cost surge due to supply chain disruptions. 💰 Dynamic Cash Flow Management-- Maintaining liquidity is vital. Rolling cash flow forecasts ensure adaptability during disruptions. ✨ Example: Leverage AI to monitor real-time cash positions and adjust spending dynamically to avoid crunches. 🚀 Reevaluating Investment Portfolios-- In uncertain times, prioritize investments with the highest short-term returns or strategic importance. ✨ Example: A tech company pauses non-essential R&D to fast-track a revenue-generating product launch. ✅ Tip: Use a tiered investment strategy, funding high-return projects first. 🌎 Diversifying Supply Chains-- Mitigate geopolitical risks and inflation by building redundancy and sourcing across multiple geographies. As CFOs, navigating uncertainty isn’t just about mitigating risk—it’s about preparing to thrive when conditions stabilize. Which of these strategies resonates most with your current approach? Share your thoughts below! 👇

What if your CEO announces record earnings only to realize the revenue is a ticking time bomb? This happened to one of my clients, a crisis they never saw coming. At 7:30 AM, my phone rang. The CFO of a fast-growing SaaS company sounded panicked. "We've been recognizing deferred revenue immediately for the past three quarters." Their situation was dire: - Earnings artificially inflated - Auditors threatening a qualified opinion - Financial statements overstated by $460,000 - Board demanding explanations and accountability All because someone on their team decided deferral accounting was "too complex" and revenue recognition standards were "more like guidelines." After a comprehensive assessment, We implemented our proven deferral management system: 1- Revenue Recognition Decision Tree:  Created clear pathways for classifying each revenue stream 2- Contract Analysis Protocol:  Developed a methodology to identify all deferred elements 3- Recognition Schedule Dashboard:  Built centralized tracking for every deferred dollar 4- Multi-Level Review System:  Established validation checkpoints with accountability 5- Knowledge Transfer Program:  Trained their entire finance team on proper deferral principles The result? Within eight weeks: Avoided potential regulatory penalties Rebuilt auditor and board confidence through transparent remediation Implemented controls that caught $120K in additional misstatements Corrected and restated financials without triggering SEC concerns Transformed their revenue recognition from a liability to a strength The CFO later told us, "What seemed like a technical accounting problem was actually threatening our company's reputation and future funding rounds." Remember: improper revenue recognition doesn't just risk fines, It undermines investor trust in your entire business. #deferralaccounting  #finance  #accounting 

When I was a VC associate, one of our snacking portfolio companies had 84 days before running out of cash. And suddenly, the board refused to write more checks. In 9 months, they had burned $1.5M and yet hadn’t gotten any real traction. The CEO looked at me and asked: “Can we even make it until summer?” It was in those 84 days that we turned the company around, and closed a $5M M&A merger. Want the playbook for extending your runway? You need to lean into operational finance. Here are 5 things we did that 99% of CFOs don’t: 1. We didn’t just model cash; We modeled decisions.     Most CPG brands fixate on cash burn without understanding the operational levers behind it. We built dynamic models that simulated vendor payment timing and revenue friction scenarios in real-time. This empowered the team to adjust spend, accelerate receivables collection, and unlock hidden cash from ops (when every day of runway mattered). - - 2. We dissected unit economics at the SKU level. Our snacking portfolio company solely relied on business-wide averages that masked product performance insights. We dug into SKU-level margins and discovered 4-point swings. Then, by simply reallocating inventory and fine-tuning our pricing ladders, we generated $60K in additional profit (without selling a single extra unit).  - - 3. We cut CAC payback lag, not just CAC When cash is tight, most companies slash marketing budgets indiscriminately. We only paused channels with payback periods exceeding 45 days. This enabled us to recycle capital 2-3 times faster than competitors. - - 4. We didn't reduce headcount; We eliminated inefficiencies. The default crisis move is layoffs, but that often destroys critical institutional knowledge. We instead restructured workstreams and brought in contractors for core execution (while retaining high-performing employees). This saved us 40% in costs and extended our runway by 2 months (without compromising quality or morale). - - 5. We didn’t report to the board—we forced decisions Standard board meetings involve passive updates that push accountability away from investors. We presented 3 paths forward: conservative, base, and stretch (each with explicit tradeoffs). This compelled investors to make active choices rather than simply receiving information. - - Cash crisis isn’t survived with more capital or by rapidly cutting costs. It’s survived by taking strategic actions that show a clear path to value creation. P.S. We built QuantFi to help consumer brands avoid such cash crunches and get operational financial insights throughout their entire investment lifecycle. P.P.S. Want to sustain longer? Check out this free profitability target calculator: https://lnkd.in/g_pEAitp (Only accessible for the next 48 hours)