How Do You Reassess a Financial Strategy Due to Changing Market Conditions?
We asked finance professionals, including Founders and Principals, about a time they had to reassess a financial strategy due to changing market conditions. From navigating market uncertainty to pivoting to cost management, here are four examples of how these finance professionals adapted their strategies for success.
- Navigated Market Uncertainty
- Reevaluated Real Estate Strategy
- Amended Purchase Orders
- Pivoted To Cost Management
Navigated Market Uncertainty
During election years, uncertainty often causes fluctuations in the mortgage-note market. In 2020, for example, leading up to the U.S. presidential election, there was a noticeable drop in seller-financing activity. Many sellers and buyers adopted a "wait-and-see" approach, hesitant to make long-term financial decisions amid potential policy changes. We’ve seen a similar trend this year as well.
In response, we focused on working more intensively on fewer deals, ensuring that each transaction was structured to meet the needs of all parties involved. By customizing terms and being patient, we managed to close high-quality deals even in uncertain times, positioning ourselves well for the market rebound.
Reevaluated Real Estate Strategy
A memorable experience was owning a real estate business during the 2008 financial crisis—a time of economic turmoil and uncertainty that significantly impacted the housing market. At the time, my company had various ongoing projects and investments in different real estate properties. Our initial strategy was to hold onto these assets for long-term gains. However, as the market began to decline rapidly, it became evident that our approach needed to be reassessed.
We quickly realized that holding onto these properties for an extended period would not yield the desired profits and could even result in significant losses. This realization forced us to reevaluate our strategy and devise new plans to navigate through the changing market conditions.
We began by conducting thorough market research and analysis to understand the current trends and projections for the future. This helped us identify which properties were most at risk and which ones had better potential for growth.
Based on our findings, we decided to sell off some of our assets that were most vulnerable to market fluctuations. This not only helped us minimize losses, but also provided us with much-needed capital to reinvest in more stable properties.
Amended Purchase Orders
We have many clients that import products into the States, and with international supply chains being under pressure due to macro-market conditions, we have to continuously reassess our purchasing-cycle planning.
The outcome is typically amending purchase orders and more cash-flow planning.
Pivoted To Cost Management
During my tenure as CFO for an e-commerce company, we encountered significant shifts in market conditions due to rising customer-acquisition costs and global supply-chain disruptions. Initially, our strategy had been heavily focused on aggressive marketing spending to drive growth, assuming stable supply-chain conditions and consistent customer-acquisition costs. However, as digital ad costs surged and logistical challenges led to increased shipping fees and delays, our profit margins began to tighten.
Recognizing the need for a reassessment, I led a cross-functional review of our financial strategy. We decided to pivot by cutting non-essential ad spending, focusing on organic-growth channels, and negotiating more favorable terms with key suppliers. Additionally, we implemented a more rigorous inventory-management system to reduce holding costs and avoid tying up cash in slow-moving stock.
The outcome was a leaner, more efficient operation. Although revenue growth initially decreased, profitability improved due to the enhanced focus on cost management and sustainable growth strategies. This shift allowed us to weather the market turbulence, maintain liquidity, and position the company for long-term success.