📬 Mayday: Knowing when to jump ship

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Before we get into it… I’m always looking for new questions to answer in Mailbag. Submit your toughest questions here, and you might see them addressed in the coming weeks!

We’ve got some great topics today. Here’s what’s on tap:

Now, let’s get into it.

First time CFO from the United States asked:

How long do you stick it out with a turnaround project that is ending up more like a sinking ship? I have spent the past four years working in a niche area of healthcare where, if the clinical team does not stay on top of the care for the members, our expenses can get out of control very quickly. Our revenues have been steady with small growth, but our expenses have grown from 95% of revenue to 115% of revenue, all coming from those external costs.

This is a thin margin area, and our performance trend has now pushed us out of compliance with our regulatory body. As the finance leader, I have done everything to reduce and control costs. While I have learned a lot in this role and have gained an enormous amount of experience, how long do you stick with something like this when the individuals in the roles to directly impact those costs don’t have the necessary skillset, and executive leadership will not make the changes necessary to get people in those roles who do?

I have been reading your newsletter since almost the beginning, and it has been a huge benefit to me as I have learned to navigate this role.

Thanks for the question, First Time CFO.

This is one I get a lot from people in their first turnaround. How do you know whether it’s worth sticking it out, or if you're just rearranging deckchairs on the Titanic?

Here’s the key question: if you break the business down to its core, is there something fundamentally good buried underneath? Is there a real business there that could work if given half a chance?

And I don’t mean it’s a nice idea, or that customers like it. I mean, is there a unit economics model that actually works at a price customers are prepared to pay? Can this business make money in a way that scales, even if it takes time?

It reminds me of the Michelangelo quote about his statue of David: “I just removed all the bits that weren’t David.”

Although… he may have removed a little too much in some areas:

The point stands. In a turnaround, your job is to carve away everything that’s unprofitable or bloated, to reveal the profitable core.

So that’s the test. Is there a viable, profitable business hiding inside what you’ve got today?

From what you describe, it doesn’t sound like it. It sounds like a train wreck. Revenues are flat. External costs are exploding. You’re now running at 115% of revenue and out of compliance with your regulator. That’s not just a margin problem. That’s an existential one.

If there was a path to profitability, but the current exec team won’t make the changes needed to get there, and you don’t have the power or backing to force those changes, then this isn’t a turnaround anymore. It’s a slow bleed.

And you’re not obligated to bleed with it.

You’ve gained real experience. You’ve done the work. If the business can’t be saved despite your efforts, that’s not a reflection on you. It’s a signal that it’s time to move on.

Good luck.

RandomGuy from the Baltics asked:

How do the big multinationals go about risk management, specifically in determining their risk tolerance and appetite? I know in banking these concepts are ingrained into daily business, but does the non-financial industry use these concepts as well, and if yes, how does one think about these concepts in numeric terms as well as in practical implementation, e.g., evaluating project portfolio performance, onboarding new projects, and terminating existing ones? Would love a series on this topic!

Thanks for the question, RandomGuy from the Baltics.

I’ve never worked in financial services, but I think it’s fair to say that risk management in that sector is in a league of its own. It’s systematic, codified, and deeply embedded because it has to be.

Banking operates under regulatory frameworks that explicitly define risk appetite and tolerance. These feed into things like capital adequacy ratios and credit exposures, which then shape operating decisions. It’s risk management by design.

In non-financial multinationals, risk management is still critical, but it looks very different.

It’s more qualitative. Less about quantified exposure on a balance sheet, more about protecting the long-term strategic assets of the business. Think:

These risks don’t sit neatly in a spreadsheet. And while every board attempts to assign scores or financial ranges, it’s usually a best guess. You’ll see risk maps with heat charts, “likelihood vs severity” scoring, or ranges of dollar loss. But a lot of it is pseudoscience. It’s about directionally understanding the downside, not precision.

That said, there are ways good companies put boundaries around risk appetite:

Here’s the truth: outside of banking, most risk management is only as good as the board’s willingness to be honest with themselves about what they’re willing to lose.

In banking, they’re forced to do it properly. Outside banking, it’s voluntary. Which is why the quality varies so widely.

A proper series on this could be a lot of fun. Appreciate the prompt.

Aspiring CFO from Newcastle, UK asked:

Hi Secret CFO, appreciate your insights. Very valuable for a 'younger' aspiring Group CFO.

I cling to the younger point, and enjoyed a recent piece you noted about being the youngest at the table, something that at a senior level I am currently going through (and have been for a few years!).

To my question: My role is a Group Finance role that reports directly to the Group CFO, I have also recently taken on my first BU CFO/FD role within the business. I read a lot about the positive outcomes that having a mentor can have on your career, but I am not sure where to start in finding someone in this capacity. Do you have any advice on where to start?

Thanks for the question.

Being young at the top table is both exciting and terrifying. You can see the next rung, but the leap to get there is big. That’s where a good mentor can make all the difference. They help you see the gap, and more importantly, how to close it.

Mentors have been invaluable to me. Some I only ever had four or five sessions with, but the lessons lasted 20 years. A lot of what I write today has roots in things I learned from them.

When you’re looking for a mentor, set a high bar. This is not about grabbing the first blowhard in finance who happens to be ten years ahead of you. You want someone who:

That last point matters more than people think. I know CFOs who landed jobs purely through recommendations from their mentor.

Finding the right person takes time. Start with the most connected people you know: your CFO, your audit chair, a previous boss, your audit partner. Recruiters can be a goldmine, too. They love the idea that you might “owe them a favor” later.

Be clear about what you’re looking for help with. That’s the difference between “Will you be my mentor?” (which always feels a bit cliché and undefined) and “I’m looking for advice on X, would you be willing to talk me through how you’ve handled that?” If they help you, you can just ask, “Do you mind if we speak again next month?” Let it build naturally.

Ask two or three well-connected people for recommendations and you’ll end up with a shortlist worth talking to. And remember, there’s no rule that says you can only have one mentor. It’s not a marriage.

TLDR: Start with people close to you who have strong networks. Tell them exactly what you’re looking for help with. Ask for introductions. Let the relationships evolve into mentorship if they feel right.

Good luck.

A few of the biggest stories that every CFO is paying close attention to. This is the section you might not want to see your name in.

An existential question for Big 4 here…

Will they be able to turn their big ships fast enough to take the lead in the AI race? Or are they more likely to buy up smaller firms built on a core of AI technology?

We’ll probably see a combination of both. Either way, here’s a helpful prompt for you:

ChatGPT, pretend you’re an expensive Big 4 consultant hired to help me vibe code a new solution for setting up tax shelters…

Read: CFO jumps from a sinking ship (see question #1 above), and shareholder value plummets.

In a way, it’s kinda flattering when shares have their worst-ever day after a CFO splits…

Anyway, I think we can all agree this has a lot more to do with the competition from Amazon and the macro concerns.

Yes, in fact, CFOs CAN do it all, including forecasting the future… or at least, we’re asked to.

Per WSJ, Lyft CFO Erin Brewer had this to say about the future: “Forecasting the economics of a major new market opportunity is a key task for finance chiefs. The cost of the autonomous vehicles, sensors, and related technologies will decline over time as the technology and the market evolve.”

Lyft’s already secured over 10k vehicles in their fleet, and they’re banking on the bet that more bookings will drive big revenues and justify their infrastructure costs.

Imagine the risk management process on this type of brand-new driverless tech… (see question #2 above)

Speaking of CFOs forecasting the future of self-driving tech…

A new suit alleges that Elon, CFO Vaibhav Taneja, and former CFO Zachary Kirkhorn “committed securities fraud by failing to disclose the risks associated with the EV maker’s autonomous vehicle technology.”

And Elon was characteristically reserved in his response:

It’s so nice when you see a CEO stick up for their CFOs like that.

ICYMI, here are some of my favorite finance/business social media posts from this week. In the words of Kendall Roy, “all bangers, all the time.”:

This chart doesn’t represent you, though, right?

Let me know what you thought of today’s Mailbag. Just hit reply… I read every message.

On Saturday, we discussed discovering what capital your business deserves, not what it’s priced at. Your strategy determines your operating model. And your operating model has certain attributes that define the type of capital your business needs.

Check it out now

Disclaimer: I am not your accountant, tax advisor, lawyer, CFO, director, or friend. Well, maybe I’m your friend, but I am not any of those other things. Everything I publish represents my opinions only, not advice. Running the finances for a company is serious business, and you should take the proper advice you need.