Shift happens: how marketers should adapt to a changing market
From a macro point of view, 2022 looks a lot different than 2021 – others have talked about it. Instead of predicting precisely how the current or next market development plays out, start-up leaders could and should prepare their companies with options to enable outsized growth in boom environments and install safety valves in adverse market conditions.
Recently, I had the opportunity to speak with two experts in the world of start-up-based finance – Caleb Matheny, CFO of Jump portfolio company M1, and Bobby Achettu, CEO of Accelerated Growth Advisors, a finance and accounting consulting firm for early-stage companies. Both professionals are tenured in managing cycles up and down and leading and advising organizations with a cash-is-king-oriented vantage point.
We talked about how financial leaders have the opportunity (read: responsibility) to navigate both frothy and headwind situations – and how these executives could better prepare and execute when tough times are looming.
We broke down three big overarching questions CEOs and CFOs should have answers for:
Leading indicator metrics = canary in the coal mine
Tactically, operators almost always have multiple levers to pull to create a cash cushion. Consistently measuring performance against intentional efforts provides financial leaders with the information necessary to determine which levers are most appropriate to pull.
Caleb and M1’s modus operandi is oriented around four pillars of focus – growth, customer value, commercial expansion, and simple survival. He shared that the decision to deploy specific strategies and tactics requires honing in on out-front indicator metrics.
A few non-obvious potentially leading indicators to consider tracking:
Creating a cushion; what is X + 12?
X + 12 simply alludes to empowering your company to add twelve (maybe six, maybe eighteen, depending on your needs) months of additional runway to hit that next important milestone or tollgate and push out a necessary (and potentially more dilutive than desired) fund raise.
When used correctly, this flexibility allows ample time to button up the operational shirt and present a posture of strength and conviction when seeking new growth enablement paths (i.e., Series A, B, or C+ funding). Bobby advises clients to identify where the emergency exits are in times of proverbial smoke. Caleb shared a comprehensive 9-step action list he helped deploy at M1 when tides turned a bit earlier in 2022. Here are a few financially oriented operational considerations and tactics:
Alignment and awareness across stakeholders
Strategic finance leaders can sometimes feel like they’re on an island while the rest of the company is laser-focused on building product, closing customers, and serving them well. The CEO/ CFO are at their best when they understand these dynamics while accurately projecting cash implications and building optionality into daily operations.
Ensuring stakeholder harmony can often feel like a tall task, particularly if market thunder is brewing. Bobby and Caleb each recommend radical transparency in communication as the best way to a) build confidence amongst fellow executives, the broader internal team, external constituents such as the Board, and equity and debt investors, and b) allow for quicker and more data-driven strategic decision making.
Establishing a communication regiment that works for your business will enable maximum clarity and conviction across CXO colleagues. An open-books perspective can prevent expense protectionism from functional leaders and, at times, allow for creative cash management ideas from team leaders you hadn’t predicted.
We hope these takeaways prompt proactivity to create optionality and result in prudent operating while allowing for companies’ north star growth mindsets.
What are your thoughts? Email Pete to continue the discussion.