I know, it sounds overly dramatic. But this was one of the key lessons I learned from a very senior person early in my career. This is what he explained to me:

“Imagine two lines. One is revenue, and one is expense. The best situation to be in is when the revenue line is above the expense line: that gap defines your profit. The goal is for it to be moving up, your expenses steady, and even better, dropping.

Now imagine that your revenue line is dipping below your expenses line. That cross over is what we call the jaws of death. ”

I asked, “Why?”, being the grasshopper at the time.

He said “Because your revenues are probably being controlled by market and environment conditions that you can’t control. So the one thing you can control is your expenses, but you’ll have to move fast to bring that line below revenues again. It’s not that easy to shed expenses…a lot is fixed.  You have to cut your intended spending way back fast to get the expense line back where it needs to be.”

This lesson has stayed with me for my whole career: both personal and professional.