Financial pressure rarely arrives as one dramatic moment. It shows up as late debtor payments, supplier reminders, and that knot in your stomach when payroll meets payables. For Founders and Small-to-Mid Business Owners, the question is not whether stress will come but how you respond when it does.
To that end, let’s distil the practical lessons from a candid conversation on the In the Trenches Podcast about leadership during financial crisis. The goal is simple. Help you act early, protect your people, and keep options open.
The Leadership Posture: Calm, Clear, Decisive
Your team, suppliers, and lenders will take their cue from you. Leadership during financial crisis starts with a posture that is steady and practical.
- Calm: Speak in facts. Frame the situation without drama.
- Clear: Prioritise cash runway, collections, and cost control before anything else.
- Decisive: Make small, daily moves that compound over weeks.
This posture builds trust and gives you the headspace to execute the steps that follow.
Insolvency in Plain English
The legal test is technical. The practical test is simple. If you cannot pay bills when they fall due, insolvency risk is real. Treat that as a dashboard light. It means investigate immediately.
Early indicators to respect:
- Chronic late payments to suppliers
- Payment arrangements that keep rolling from month to month
- Stretching creditor terms beyond what you agreed
- ATO pressure or Director Penalty Notices becoming likely
- Super or other statutory liabilities falling behind
For Founders and Small-to-Mid Business Owners, noticing these patterns early is the difference between a controlled plan and rushed decisions.
Cash Beats Profit: The Weekly Discipline
Many leaders point to a profit and loss statement and feel comforted by a positive result. Then the bank balance tells a different story. The gap is often in receivables, timing differences, work in progress, or inventory. A profit line does not fund payroll. Cash does.
A simple weekly rhythm:
- Build a 13-week cash view that you can update in 30 minutes
- Run a weekly collections push with specific names, amounts, and dates
- Tidy the timing of payments to align with cash coming in
- Refresh three scenarios each week: best, base, worst
This rhythm lets you course-correct quickly, which is a core part of leadership during financial crisis.
Four Levers You Can Pull This Month
You do not need a perfect plan to start. You need momentum. These levers create breathing room without destroying goodwill.
Revenue Quality
- Prioritise jobs with short billing cycles and strong collection history
- Price risk properly on complex or long-duration work
- Stop loss-making jobs early and reallocate capacity
Pricing and Terms
- Lift prices where value supports it
- Shorten payment terms for new work
- Stage invoice milestones to pull cash forward
Cost of Goods Sold
- Ask key suppliers for volume breaks or loyalty terms
- Join a buying group if your industry supports it
- Engineer substitutions that protect quality but lower cost
Overheads
- Right-size space, software, vehicles, and external services
- Freeze non-essential spend and hiring
- Consolidate suppliers to gain leverage and simplify approvals
Each move may feel minor on its own. Together, they extend runway and reduce noise.
Communicate Early and Often
Silence erodes trust. Proactive communication keeps partners onside.
- With banks and lenders: Share the numbers, the plan, and your dates.
- With suppliers: Explain the situation, agree a short arrangement, and meet it.
- With staff: Give context, priorities, and the next steps for the team.
- At home: Short, honest updates reduce stress and stop assumptions.
For Founders and Small-to-Mid Business Owners, this habit is a strategic edge. You will be surprised how often partners support a credible plan when they are kept in the loop.
Voluntary Administration: What It Does and Does Not Do
If pressure escalates beyond normal trading fixes, voluntary administration can create a lawful pause while a turnaround plan is considered. Here is what that looks like in practice:
- An independent administrator takes temporary control.
- A moratorium limits most recovery actions while the plan is assessed.
- Trading can continue if the underlying business is viable.
- New trading is kept clean while past debts sit behind the line for a negotiated solution.
This is not a sign of giving up. It is a tool designed to protect value while a sustainable plan is put to creditors. When managed well, it buys time for an orderly restructure that normal trading cannot deliver under pressure.
Common Pitfalls to Avoid
Under pressure, even capable operators fall into predictable traps. Avoid these if you can:
- Waiting too long: Hope is not a plan. Early action preserves options.
- Hiding facts: Advisers and administrators will discover the truth. Transparency brings cooperation.
- All-or-nothing moves: Pilot changes. Test price shifts with one segment first.
- Cutting the pipeline too deep: Trim spend, but keep near-term revenue activity focused and funded.
Leadership during financial crisis is often the art of avoiding unforced errors.
Signals That Say You Need Outside Help
There is no prize for doing this alone. Bring in a specialist if you recognise any of these signals:
- Demand letters are arriving more often than usual
- You keep delaying statutory payments to make payroll
- A large customer has failed or is 90 to 120 days overdue
- Your 13-week cash view keeps slipping negative in the near term
- You are spending more time triaging than serving customers
A good adviser gives you structure, pace, and credible options. For Founders and Small-to-Mid Business Owners, that support can be the difference between an orderly reset and an avoidable shutdown.
What Stronger Leadership Looks Like Day to Day
You do not need to be perfect. You need to be consistent. Here is what that looks like:
- You start the week with a cash huddle and end the week with a collections review.
- You explain the trade-offs and follow through on dates.
- You set two or three actions every week that extend runway or speed up cash.
- You model the behaviour you expect from others. Calm, clear, and decisive.
This is the practical side of leadership during financial crisis. Your team sees it, your suppliers feel it, and lenders notice it.
Wrapping Up
If you are reading this because cash is already tight, take a breath. You still have choices. Start with the simple weekly rhythm, make the first calls, and ask for help earlier than feels comfortable. The people who rely on you need a plan more than they need promises. You can give them that by taking the next right step today.