Planning ahead is key to surviving an economic downturn

As part of an occasional series on dealing with a possible recession, we’re asking CFOs and other finance pros who have been through a recession before how they’re gearing up in case the economy does contract in the coming months. Want to share your wisdom? Drop us a line, and let us know your thoughts.

The drumbeat of economic doom can be a little hard to bear for finance departments that have dealt with so much tumult since 2020: a global pandemic, a steep but short recession and the Great Resignation.

But now is not the time for complacency, says veteran CFO Jenny Bloom. She’s seen a lot of economic upheaval in her 35-year finance career, including facing the Great Recession as CFO of Mailchimp in 2008 and navigating the pandemic as CFO of Zapier. She’s now working with several organizations as a fractional CFO.

CFO Brew spoke to Bloom about what she learned from the 2008 recession, what she thinks finance departments should be doing to prepare for another recession, and the skills finance professionals will need to weather an upcoming economic storm.

This interview has been edited for length and clarity.

How did the 2008 recession unfold for you, and how did it impact your business?

I was at MailChimp, and [in] 2008, it was still kind of the beginning for them. They started out in 2001 as a web design agency, and then they switched fully to MailChimp in 2007. So in 2008, they were really still just ramping up. We were just a scrappy startup.

One of the things we did that I think was super helpful was we saw companies having problems with spending and paying bills and email was a great way to market to customers. So between 2008 and 2010, 2011, we increased our freemium plan three times, in effect, lowering prices three times because we really wanted to help our customers. That paid off in the long run.

MailChimp was a very inexpensive “do it yourself” product, and most marketing is a lot more expensive. It was very easy for people to come down from products similar to MailChimp that were much more expensive. That definitely helped MailChimp during 2008 and 2009.

What were your main focuses as CFO navigating through that time?

It was really looking at the forecast and making sure that we could handle the different price cuts we were doing. Also always scrutinizing expenses to make sure that we were spending the money on marketing where we needed to, but were not paying in other places where we shouldn’t be spending money.

I think, even now, you never know what’s around the corner. I always want to really scrutinize expenses and make sure we’re spending money wisely and not overspending where we shouldn’t be. And always forecasting to make sure you have the money you need to spend.

The 2008 recession, the Covid recessions, those were “bottom drop” moments. The predictions of another recession in late 2022, or in 2023, it seems to be a slow boat over the horizon. How are you approaching those two types of events differently, or are they different in your mind?

I don’t really think they’re different, but I do think it’s more about planning in advance and not reacting yet. Put your plan in place, but don’t react until you really see that you need to.

What are the things that you are prioritizing as CFO in preparation for a recession now?

First, it’s looking at headcount. People had big headcount plans last year and spent crazy money on headcount. Is that headcount really needed? All the companies I’ve been working with lately, their revenue forecasts seem a little high with what’s going on. Let’s take them down a little bit. And it’s looking at every expense to see, can you get a better deal?

What are your biggest concerns about the broader economy within the next year to three years?

In technology, where I’ve been, everything’s been so overpriced, and I knew it couldn’t continue. I think it’s going to be a slap in the face for a lot of people just because they’re used to spending money like crazy, and now they can’t. It’s growth at all costs, and it’s very difficult for people to change that mindset.

What are the skills and experiences you’re looking for when hiring finance talent to help you navigate the next couple of years?

Resilience, agility, and problem-solving. It's all the soft skills versus the technical skills, because it really takes a lot to get through all this stuff.—DA