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Brent Beshore and Mark Brooks discuss how operators should think about expense cuts during the COVID shock, especially when revenue can drop suddenly and unpredictably. The episode emphasizes transparent communication, zero-based budgeting, and a disciplined way to separate fat, muscle, and bone when deciding what to trim. It also highlights ways to preserve top-line momentum by focusing on existing customers and lower-cost retention offers.
Small-business operators and ETA investors who need a practical framework for triaging expenses during a sudden downturn without destroying long-term value.
Openly telling employees that leadership does not have all the answers can reduce anxiety and build trust during a crisis.
Zero-based budgeting forces owners to justify each expense from scratch instead of inheriting spend from better times.
A good first pass at cuts is to remove obvious fat before touching items that impair core operating capacity.
Health benefits are closer to bone than fat in a public health crisis because cutting them damages trust with frontline employees.
Long-term growth projects and new initiatives usually belong in the muscle bucket because they can be delayed without permanently killing the business.
Existing customers are cheaper to sell to than new prospects, so email lists, past buyers, and renewals become valuable revenue channels in a downturn.
Expense reductions should be treated as triage in a crisis, not as permanent policy, unless the leaner structure clearly improves the business.
A categorization system for expense cuts: fat is nonessential spend that can be removed with little downside, muscle is spend that supports future growth but can be postponed, and bone is core spend whose removal causes lasting harm.
When to use: Use it when deciding which cuts to make first under severe cash pressure.
Start with a blank sheet and rebuild the expense base from only what is truly needed to operate now, rather than assuming last period's budget is still valid.
When to use: Use it when a business needs to re-rationalize spend quickly after a demand shock.
Mark Brooks says COVID-19 created an overnight shutoff in demand that is unlike a normal slowdown and even different from the 2008-2009 crisis.
Used to explain why traditional recession playbooks may not fit the pandemic.
The episode was recorded on March 17, during the early phase of the pandemic response.
The hosts timestamp the discussion because conditions were changing by the hour.
For most human-driven businesses, health care is typically the next-largest expense after salaries.
Used to explain why benefits cuts are so sensitive.
Tell employees early that layoffs are a last resort if that is genuinely the case.
Why: That framing can mobilize the team to help find other ways to preserve cash and keep the business operating.
Put yourself back into the payment-approval flow for a few weeks or months.
Why: Direct review of outgoing checks gives a faster, more accurate view of cash leakage than a spreadsheet alone.
Use a blank-sheet budget review to identify which expenses are actually required right now.
Why: Historical spending patterns often hide unnecessary costs that become visible only when rebuilt from scratch.
Shift spend toward customers you already have before spending heavily on new prospecting.
Why: Past buyers and subscribers convert more cheaply, especially when cash is tight and conversion windows are longer.
Offer renewals, cross-sells, or discounts to existing customers before cutting deeper into core operating capacity.
Why: These actions can raise revenue while avoiding the lasting damage that comes from cutting bone.