18 Ways To Navigate Financial Challenges And Protect Your Organization

Economic downturns, shifting market conditions and other unforeseen disruptions can quickly put financial strain on an organization. When essential funds start to dwindle, leaders must take swift, strategic steps to safeguard their organization’s stability. These might include reassessing financial priorities, identifying cost-saving measures or strengthening stakeholder relationships to uncover new opportunities.

Below, 18 Forbes Finance Council members share key strategies leaders can implement to guide their organizations through financial hardship and position them for long-term resilience.

1. ‘Stop Digging’

When you find yourself in a hole, stop digging! Typically, you get to this place by taking a “flashlight” approach to your business—or trying to do too much at once. The key now is to have a laser beam type of focus on your highest profit margin work. – Joseph Milano, New South Wealth Management

2. Distinguish Between Profitability And Liquidity

The first crucial step is distinguishing between a profitability and liquidity challenge. For immediate liquidity needs, leaders should focus on unlocking working capital. Organizations can then implement tactical spending controls on non-core activities. Having a robust “downturn planning” framework isn’t just a contingency; it’s a fundamental leadership tool. – Sunayana Gutta, Reddit

3. Consider Fixed And Variable Costs

Leaders experiencing financial losses should take a hard look at their fixed and variable costs. By cutting unnecessary fixed expenses and boosting margins, they can better manage variable costs, improve operational efficiency and create a more resilient business model. Even small adjustments can have a big impact and set your business up for long-term success. – Xan Myburgh, Backd Business Funding

4. Shift From Defense To Offense

When essential funds shrink, leaders must flip the script and shift from defense to offense. Instead of just cutting costs, identify overlooked revenue streams, repurpose resources creatively and turn constraints into innovation. Engage your team’s best minds, double down on high-value clients and rethink your strategy. The key isn’t just survival, it’s evolving to thrive in new ways. – Ryan Showe, Lexington Capital Holdings

5. Prioritize Cash Flow Optimization

It’s important to prioritize cash flow optimization to ensure business continuity. This means cutting nonessential expenses, renegotiating contracts and identifying quick revenue opportunities. Also, maintaining transparent communication with investors and stakeholders while exploring alternative funding sources—such as strategic partnerships or bridge financing—can help stabilize operations. – Zehra Soysal, Metaphysic.ai

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6. Practice Contingency Planning And Forecasting

Businesses that practice contingency planning quarterly combined with forecasting for sensitivity analysis will be more prepared for the changes that may come. Run middle and worst-case scenarios tied to financial models to allow the leadership to work on an action plan, should one become necessary. – Alan Chaffee, Turning Point Strategic Advisors

7. Assess The Depth Of Cost Reductions

When facing funding losses, leaders must consciously evaluate the depth of necessary cost reductions. Are you cutting fat, muscle or bone? The key is understanding whether the financial impact is short, medium or long-term. Reducing expenses too drastically when unnecessary means a longer recovery period. Strategic cost management requires careful consideration of impact duration. – Brandon Spear, TreviPay

8. Diversify Revenue Streams

One crucial step leaders can take when facing funding issues is to diversify revenue streams. By exploring alternative funding avenues, such as grants, partnerships and innovative fundraising strategies, leaders can create a more resilient financial foundation. This should mitigate the impacts of lost funds while also enhancing the organization’s capacity to thrive in challenging economic climates. – Swati Deepak Kumar (Nema), Citigroup

9. Create A Cash Flow Forecast

Leaders facing liquidity challenges can make better decisions regarding their cash resources by creating a 13-week cash flow forecast for better visibility into inflows and outflows. Additionally, focusing on timely invoicing and collections, along with prioritizing mission-critical expenses, contributes to improving cash flow and maintaining essential operations. – Matthew Barbieri, Wiss

10. Carefully Evaluate Where The Money Is Going

The first step is to take a hard look at where the money is going. Identify unnecessary expenses, tighten the budget and focus on cash flow. It’s also smart to renegotiate contracts and explore new revenue streams. Most importantly, stay transparent with your team and stakeholders—proactive planning and honest conversations can help steer things back on track. – Michael Foguth, Foguth Financial Group

11. Reconnect With Your ‘Why’

Leaders losing funds must reconnect with their “why.” I once advised a firm to refocus on purpose instead of quick fixes. By rallying their team and authentically engaging clients, they built trust, sparked new partnerships and regained stability. Purpose isn’t just a guide—it’s the best financial strategy. – Bob Chitrathorn, Wealth Planning By Bob Chitrathorn of Simplified Wealth Management

12. Conduct A Detailed Financial Assessment

The first step would be to carry out a detailed financial assessment to identify the cause and level of financial loss. Review your expenditure profile and look for sources to raise additional funds. – Richard Okon, St Nicholas Hospital

13. Perform Regular SWOT Analyses

We regularly perform SWOT (strengths, weaknesses, opportunities, threats) analyses in our business. Not only do we analyze client trends, new financial regulations, new technology and competition, but we also take a serious look at how these may affect cash flow. We are always balancing what we can do in-house and what might be more effective to subcontract, emphasizing quality and cash flow. – David T. Nudelman, Scandinavian Capital Markets

14. Keep A Constant Eye On Your Expected Cash Reserve

A leader should always look at what their expected cash reserve should be. We recommend 10% of annualized revenue on a conservative basis and up to 30% if an owner prefers less risk. When an owner starts dipping below that amount, they need to look and see why that is. Discovering what is causing the dip is essential to curb the problem and keep your business on track. – Jody Grunden, Summit Virtual CFO by Anders

15. Practice Cost Containment

One strategy that really stands out is cost containment, strategic cuts to expenses that can make a huge difference in preserving the organization’s financial health. But it’s not just about making cuts; leaders need to stay agile and ready to adapt to changing circumstances around them. It’s all about maintaining a balance and ensuring that the organization can weather the storm and come out stronger. – Tomas Milar, Eqvista Inc.

16. Implement Key Person Insurance

Key person insurance creates a tax-free business reserve and boosts lending power. It provides liquidity by allowing policy loans against its cash value, avoiding bank restrictions. I advised a firm that survived a downturn by tapping into its policy funds, covering payroll without debt. Leaders must plan ahead—this strategy strengthens financial stability and ensures long-term success. – Andre Pennington, Pennington Law

17. Look For Profit Leaks

One critical step is to immediately look for profit leaks. Perform a cash-flow triage: Pinpoint major cost drains, renegotiate contracts and reevaluate nonessential expenses. By quickly redirecting resources to where they produce the greatest return, leaders can plug profit leaks before they threaten the organization’s sustainability. – Peter Goldstein, Exchange Listing LLC

18. Implement Strategic Cost-Cutting

Leaders can implement strategic cost-cutting by prioritizing essential spending, renegotiating contracts, streamlining operations, reducing fixed costs and optimizing resources. This ensures financial stability without compromising core functions. – Mahdi Yazdizadeh, Ereele Capital

The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.