How leaders make better fiscal decisions during economic crisis

Executive overview

When a crisis hits, most leaders react emotionally and make fast decisions that feel productive but aren't. The ones who navigate well pause, gather facts, and think in scenarios weeks and months out rather than days.

The key distinction is between deferred demand and lost demand — knowing which one your business faces determines every resource decision you make during a downturn.

Leaders who know their three to five key numbers and protect their people come out ahead.

The leader mindset under pressure

• Good decisions and fast decisions rarely coexist — choose good.
• Best leaders are agitated and disruptive when times are calm; calm and rational when everyone else is panicking.
• Decisions require 40–70% information — waiting for more means fewer options, not better ones.
• Movement beats paralysis: a wrong decision still teaches you something; inaction teaches nothing.
• Gathering real data is the first step toward rational response.

Deferred demand vs lost demand

• Deferred demand: purchases delayed, not cancelled — buyers will return when conditions allow (e.g., car sales).
• Lost demand: revenue that cannot be recovered — a restaurant closed for a month cannot sell those meals later.
• Demand can also be pulled forward, not just pushed back — inflated sales now mean a drop later (e.g., toilet paper).
• Cutting to the bone in a deferred-demand business can convert deferred demand into lost demand — you won't have capacity when buyers return.
• Understand whether the people losing jobs are your customers; that determines how deeply demand is actually impaired.

Using debt and leverage correctly

• Leverage accelerates both gains and losses — it is not a rescue tool.
• The right time to take on debt is during growth, not during a downturn.
• Build reserves on the upside so you have hedges when the downturn comes.
• Most wealth in business and markets is made by whoever has the smallest losses going into a recovery — the head start compounds.
• Applying for both a payroll loan and unemployment simultaneously is a logic failure — think through what each tool actually does.

Building financial discipline as a leader

• Successful businesses can always produce clean financials; tax complexity is often a proxy for poor bookkeeping.
• You do not need to track every dollar — identify the three to five numbers that actually drive your business and watch those.
• Lift your eyes to the horizon: think one to three years out, not just the next quarter.
• Broaden your scope beyond your own customers to suppliers, adjacent industries, and potential customers.
• Risk-taking is not optional — if you only do what you've always done, you get what you've always got.
• There will never be a moment when the inbox is clear enough to focus on strategy; schedule it anyway.

US government relief programs (COVID-19 context)

1. Unemployment — expanded to cover self-employed; still administered by states; first option if business is decimated with no reserves.
2. Emergency sick pay and FMLA (Families First Act, not CARES Act) — employers provide up to 80 hours sick pay, subsidised by federal tax credit; FMLA extends to 10 weeks for family care; hours can be spread across the full year, not used in one block.
3. EIDL loans (Economic Injury Disaster Loan) — SBA-backed, normally underwritten based on ability to repay; designed to stretch a short-term revenue hit over two to three years, not to subsidise ongoing losses; the $10,000 "grant" is an advance on the loan, not a free grant.
4. PPP loans (Paycheck Protection Program) — loan sized at 2.5x average monthly payroll; forgiven if headcount and pay rates are maintained and funds used for payroll in the eight weeks post-funding; best for businesses expecting a short-term hit with revenue recovery to follow.