Communicating Bad News: How to Tell Your Board Revenue Dropped 30%
Presenting difficult metrics honestly—and showing a plan to fix the problem.
It’s Monday morning.
You’re opening the metrics dashboard.
Revenue is down 30%.
Your first instinct: Hide it. Hope it bounces back. Tell the board next month when you have a “plan.”
But this is the wrong move.
Communicating bad news transparently builds trust. Hiding it destroys it.
The Principle: Bad News Early, Good News Late
When you have bad news, communicate immediately.
When you have good news, you can wait (maybe it reverses, maybe it’s a one-off).
This principle applies to board updates, investor calls, and team communications.
How to Communicate Bad News
The structure:
- The metric (state the bad news clearly)
- The context (why did this happen)
- The root cause (what’s the real problem)
- The response (what are you doing)
- The timeline (when will it be fixed)
Example: Revenue Down 30%
The metric:
“Revenue dropped from $100k last month to $70k this month. This is a 30% decline and the lowest we’ve had in 18 months.”
State it clearly. Don’t soften it.
The context:
“This is driven by a combination of factors:
- Seasonality (July is typically 20% lower than June; summer is slower)
- Two large customers churned (representing $25k in lost revenue)
- New CAC is up 40% (we’re acquiring fewer customers)”
Give context. Show you understand why it happened.
The root cause:
“The primary driver is customer churn. Our two largest Enterprise customers (25% of revenue) both left because:
- Customer A realized we didn’t have feature [X] they needed. They switched to [Competitor].
- Customer B went out of business (not our fault, but revenue is gone).
Separately, new CAC increased because we’ve exhausted our cheapest acquisition channels. New customer acquisition is now coming from more expensive channels.”
Dig deep. Identify the real problem.
The response:
“Here’s what we’re doing:
SHORT-TERM (stop the bleeding):
- Reach out to other at-risk Enterprise customers (we know 3 more are at-risk for similar reasons)
- Implement [Feature X] quickly (accelerating our roadmap by 2 months)
- Negotiate retention offers for at-risk customers
MID-TERM (fix the root cause):
- Build feature X properly (not a hack; a real implementation)
- Shift acquisition strategy to lower-CAC channels (test organic growth, partnerships)
- Improve product-market fit in Enterprise segment
LONG-TERM:
- Reduce customer concentration (we shouldn’t have 25% of revenue in 2 customers)
- Build a moat so we’re not as vulnerable to feature gaps”
Show clear actions. Make it specific.
The timeline:
“Timeline:
- This week: Customer outreach, feature X design
- Week 2-3: Feature X beta (showing affected customers we’re solving their problem)
- Week 4: Feature X live
- Month 2: Evaluate if retention efforts worked; assess if we’ve stabilized
- Month 3: Full retrospective on why we missed this gap
Expected outcome: Stabilize revenue at $85k by month-end (recover 50% of loss).”
Give a timeline for recovery.
What NOT to Do
Don’t hide it
Thinking: “Revenue dipped this month but will bounce back. No point worrying the board.”
Reality: Board finds out next month and thinks you were hiding it. Trust is destroyed.
Don’t sugarcoat it
“Revenue was a bit soft this month” (instead of “Revenue dropped 30%”)
Soft language sounds like you’re hiding something.
Don’t blame external factors
“The economy is weak / Competitors are aggressive / COVID / market timing”
Sure, external factors matter. But they matter for everyone. What did you do wrong?
Don’t promise guarantees
“We’ll be back to $100k by next month guaranteed.”
You don’t know the future. You can’t guarantee it. If you miss, credibility is destroyed.
Instead: “We’ll implement feature X and expect to recover $15k in revenue. If it works, we’ll be back to $85k.”
Don’t present without a plan
“Revenue is down and we’re not sure what to do.”
This is panic. It erodes confidence.
Always present bad news with a plan (even if it’s preliminary).
Delivering the News
Who to tell first:
- Your co-founder/CEO (if you’re not the CEO)
- Your board (if you have one)
- Your executive team
- Then your full team
Don’t let people find out through the grapevine.
How to deliver:
Option 1: During a scheduled update (monthly board meeting, quarterly review)
Option 2: Emergency communication (if it’s really bad, don’t wait for scheduled meeting)
Call the board. “We have news. Revenue dropped 30%. I want to give you context before next month’s board meeting.”
Option 3: Written (if you can’t meet immediately)
Prepare a 1-page summary. Send before you schedule a call.
Then discuss on call.
How Boards React
Good response:
“This is concerning, but you have a plan and you’re being transparent. Let’s discuss how we can help. Can we accelerate hiring, give you capital to double down on acquisition, etc.?”
Boards respect transparency and clear thinking.
Bad response:
“You hid this from us? We’re losing confidence. What else are you not telling us?”
This happens when you try to hide problems and get caught.
Lessons for Next Time
After you stabilize, do a postmortem:
- Why didn’t we see customer churn coming?
- Why were we vulnerable to 2 customers leaving = 25% revenue loss?
- How do we prevent this?
Use the bad news as a catalyst for improvement.
The Takeaway
When revenue drops, cash flow pauses, or key metrics decline, communicate immediately.
State the problem clearly. Give context and root cause. Present a plan. Give a timeline.
Transparency builds trust. Hiding erodes it.
Boards don’t panic over bad news if you’re honest and have a plan. They panic when they feel lied to.
We help you diagnose problems, develop response plans, and communicate them clearly to stakeholders.
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