The Floor and the Sky: Why Cutting Costs Will Kill You (But Slowly, So You Don’t Notice Until It’s Too Late)
Every CEO in trouble does the same thing. It’s practically a ritual. The numbers go sideways, the board gets that look — the one where they’re very interested in the ceiling tiles — and the CEO comes back to the next meeting with a cost-cutting plan so detailed, so thorough, so committed, that for a brief, beautiful moment, everyone in the room feels like a problem has been solved.
It hasn’t. You’ve just rearranged the furniture on the Titanic. Nicer arrangement, though.
Here’s the thing about cutting expenses that nobody says out loud because it sounds defeatist and CFOs have feelings too: there’s a floor.
You can cut your marketing budget. Then you can cut it again. Then you can cut the team that cuts the budget. At some point, you are a CEO with a laptop, a Wi-Fi password, and the sinking feeling that you’ve optimized yourself out of a company. The floor is zero. You cannot spend negative money. (I know a few founders who tried. It did not end well for them or their marriages.)
Expense reduction is a bounded game. The ceiling on what you can save is, at most, everything you’re currently spending. And long before you get there, you’ve cut the people who knew where things were, the systems that made other systems work, and the morale that was holding the whole contraption together with duct tape and misplaced optimism.
You’re not leaner. You’re just… less.
Revenue is different.
Revenue has no floor either — I’ve met companies that proved that conclusively — but more importantly, it has no ceiling. None. The number can keep going up. It can go up in ways you didn’t plan, didn’t predict, and frankly don’t entirely deserve. New markets. New use cases. A customer who tells two friends. A product that turns out to solve a problem you didn’t know you were solving.
Growing revenue is an unbounded game. It’s harder, messier, and requires you to go outside and talk to actual human beings, which I understand is a dealbreaker for some people. But the math is on its side. You’re not trying to get from $2M in expenses to $0. You’re trying to get from $2M in revenue to $20M. Then $200M. The direction of travel matters as much as the starting point.
Cost-cutting is a retreat with a map. Revenue growth is an advance with a compass. One tells you exactly where you’re going to stop. The other doesn’t tell you where you’ll stop at all.
The dangerous part — and this is where I earn my coaching fees — is that cutting expenses feels like progress. You can measure it instantly. You can put it in a slide deck. The board nods. The CFO stops looking at the ceiling tiles. You feel like a decisive leader making hard calls.
You are, in fact, a person who is getting very good at a game with a predetermined maximum score.
Growing revenue is uncomfortable because it requires belief. Belief that the market wants what you’re selling. Belief that your team can execute. Belief that the effort will pay off before the money runs out. You can’t spreadsheet your way into that. You can’t cut your way there.
At some point, every turnaround CEO has to make a choice: keep trimming until there’s nothing left to trim, or go find the growth.
I’ve done both. I know which one has a future in it.
The floor is real.
The ceiling isn’t.
Act accordingly.
