Investors still have plenty of capital to put to work, but most are no longer willing to fund businesses that don’t have a clear path to generating free cash flow or becoming profitable. That’s why it’s become critical for companies to demonstrate to everyone from current investors to potential suitors that they can run a lean operation.

“Investors are looking at how companies are weathering the storm,” says Joseph Gwozdz, a veteran CFO who is now an operating partner at Edison Partners, a growth equity firm. “How are they dealing with inflation and talent shortages, and the like, and do they understand you can’t spend money like crazy.”

But trying to cut your way to profitability is fraught. While it may provide some short-term relief, it’s unlikely to lead to long-term success. Danielle Murcray, CFO of cybersecurity company AttackIQ, says savvy finance teams will focus on sales and marketing efficiency rather than cuts. “You can cut marketing spend as much as you want, it’s never going to get you to where you need to be,” she says. Instead, the focus should be on how much revenue and profit those marketing investments are able to generate, she says.

Top talent has always been distributed around the globe, but many companies have been hesitant to hire employees in distant locations. The move to hybrid and remote work has helped many get past that hesitation. Going remote, distributed, and global is an opportunity to better navigate the talent crunch — for instance, by tapping locations that offer an abundance of skills in a particular area — and to generate cost-savings at the same time.

One way to achieve this is by encouraging managers to think in terms of budgets rather than headcount, says Michael Tannenbaum, CFO and COO of Brex. “If I give an engineering lead a budget of $10 million, it can mean very different headcounts if it's a US-funded team versus international team, and it forces them to make a trade-off.”

“When you give them a budget, you're introducing scarcity, and the engineering manager will say, ‘I need horsepower here. I'm going to go fill 40% of that budget in India at a ratio of five-to-one versus what I can get in the US for that same dollar amount.’”

The decision to go global should be easier now that a proliferation of cloud-based tools for everything from communications to accounting and resource management have made it easier — and sometimes, cheaper — to onboard and collaborate with employees from anywhere.

Many companies try to be all things to all people, but not every customer is necessarily a good fit. Taking a broad view on your customer market risks increasing churn and could be costly in the long run. A better strategy for these times is to focus on pleasing — and retaining — the customers that best align with your core mission.

At Brex, Tannenbaum has developed a framework for ranking priorities based on a set of criteria laid out on a matrix. On one axis, he says, is the company’s mission and how closely an investment would be tied to the core product. On the other axis are less tangible criteria such as customer happiness.

“Ultimately, it will translate to financials. Customer success and financials are very closely correlated,” he says.

Similarly, not all products and projects will yield the same return on investment. So instead of doing 10 projects, for example, it may make sense to focus on the top five and put spend and staff against those.

“You can still fund growth initiatives, but you stage the investment, and you release more investment once you have more proof points,” says Tannenbaum.

The whole company, from the CEO to the intern, needs to be on board with spending smarter. To that end, think about recognizing cost savings as much as revenue wins. This might be in the form of a weekly email, an announcement at an all-hands meeting, or through a special channel on Slack or Teams. Highlight cost-savings big and small, and name employees who have led to those savings.

This will go a long way toward developing a culture where workers are aware of budgets and think like an owner about their own resources. Another benefit of this approach: Workers across the company often know best where wasteful spending is taking place.

A downturn likely means your valuation is not what it once was. But that’s also true for other companies, and that means there could be opportunities to make acquisitions on the cheap.

Such deals can be a cost-efficient way to grow not only your product or customer base, but also your staff through “acqui-hires,” where you buy a company primarily for its people. Often, these people have subject matter expertise and may even have built a product that can dramatically accelerate your company’s organic roadmap.

With interest rates rising, you might also take a new view on the money you have in the bank. Higher interest rates increase the cost of borrowing, but it also means higher returns on the money you are saving. If you’re a billion-dollar company, even 3% is a meaningful return — enough for those acquisition opportunities or other growth investments.