Presenting Bad News to Your Board: A Founder's Guide
How you handle setbacks often matters more than the setbacks themselves. Here's how to communicate challenges while maintaining trust and getting the support you need.
The Core Principle
Never surprise your board. Pre-wire difficult topics individually before the meeting, and always pair bad news with a clear action plan.
Every founder will eventually face the uncomfortable task of delivering bad news to their board. Missed revenue targets, a key departure, a failed product launch, declining runway—it comes with the territory of building a startup.
The founders who handle these moments well often emerge with stronger board relationships. Those who handle them poorly lose trust and support when they need it most.
As fractional CFOs, we've helped founders navigate dozens of difficult board conversations. This guide shares the frameworks and approaches that work.
Why Honesty Matters
Your instinct might be to hide problems or spin them positively. Resist this. Here's why transparency—even about bad news—builds rather than erodes trust:
Board Members Find Out Eventually
Bad news rarely stays hidden. When it comes out later, you lose twice—once from the bad news, again from the broken trust.
Early Disclosure Enables Help
Investors can only help with problems they know about. Surfacing issues early gives them time to assist—with advice, connections, or capital.
Judgment Comes From Handling, Not Problems
Experienced investors know startups hit bumps. They're evaluating how you respond to adversity, not whether you encounter it.
Types of Bad News
Not all bad news requires the same approach. Understanding the type helps you calibrate your response:
Performance Misses
- • Revenue below plan
- • Missed product deadlines
- • Growth slower than forecast
- • Burn higher than budgeted
Critical Issues
- • Key executive departure
- • Major customer churn
- • Cash runway concerns
- • Security incident or legal issue
Strategic Pivots
- • Product isn't working
- • Market assumptions wrong
- • Need to change direction
- • Competitive dynamics shifted
External Factors
- • Market downturn
- • Regulatory changes
- • Major competitor move
- • Economic conditions
The SBWB Framework
When presenting bad news, use the SBWB framework to structure your communication:
SBWB Framework
S - Situation
State the problem clearly and directly. No softening, no burying it in context. Lead with the headline.
"We missed our Q3 revenue target by 25%. We closed $450K against a plan of $600K."
B - Background
How did we get here? What factors contributed? Take ownership without making excuses.
"Two enterprise deals we expected to close pushed to Q4. Our sales cycle is running longer than planned in the enterprise segment, and we underestimated this when setting targets."
W - What We're Doing
Concrete actions you're taking to address the issue. Be specific about steps, timelines, and owners.
"We're taking three actions: (1) Adding two more enterprise AEs to increase pipeline coverage, (2) Implementing a deal qualification framework to improve forecasting accuracy, (3) Building in longer sales cycles to Q4 and 2024 targets."
B - Board Help
What specific help do you need from the board? Make it actionable.
"We'd appreciate introductions to enterprise sales leaders who've built teams selling into our target segment, and any portfolio companies who might be prospects for us."
Pre-Wiring Difficult Topics
Never surprise your board with bad news in a meeting. Pre-wiring means calling board members individually before the meeting to give them context.
Why Pre-Wire?
- Avoid emotional reactions: People process bad news better privately than publicly
- Answer questions in depth: One-on-one allows for deeper discussion
- Come to meeting aligned: Board members arrive ready to be constructive
- Get early input: You might get helpful suggestions before the meeting
How to Pre-Wire
Pre-Wire Call Structure
- 1. Schedule brief calls (15-20 min)
"Can I get 15 minutes before the board meeting to share some context on a topic we'll discuss?" - 2. Lead with the headline
Don't bury the news. Start with: "I want to give you advance notice that we missed Q3 revenue by 25%." - 3. Share background and plan
Walk through the SBWB framework on the call. - 4. Ask for input
"Any questions or suggestions before I present this to the full board?" - 5. Gauge reaction
This helps you calibrate how to present in the meeting.
Common Scenarios
Scenario 1: Missed Revenue Target
How to frame it:
- • Be specific about the miss (actual vs. plan, percentage)
- • Explain root causes without making excuses
- • Show updated forecast that's realistic, not optimistic
- • Outline specific actions to improve execution
Scenario 2: Key Executive Departure
How to frame it:
- • Pre-wire this one immediately—don't wait for board meeting
- • Explain circumstances honestly (their choice, your decision, etc.)
- • Show transition plan and interim coverage
- • Ask for help with the search if appropriate
Scenario 3: Runway Concerns
How to frame it:
- • Show exact cash position and current runway
- • Present scenarios: base case, downside, upside
- • Outline runway extension options
- • Be clear about fundraising timeline and needs
For more on this topic, see our complete guide to startup runway.
Scenario 4: Strategic Pivot Needed
How to frame it:
- • Present the data that supports the pivot
- • Show you've thought through alternatives
- • Outline the new direction and why it's better
- • Acknowledge sunk costs honestly
- • Ask for input—this is a decision to make together
What NOT to Do
Don't Hide It
Omitting bad news or burying it in an appendix erodes trust faster than the bad news itself. Board members notice what's missing.
Don't Spin It
Experienced investors see through spin immediately. "We missed by 25% but learned a lot" rings hollow. Acknowledge reality directly.
Don't Blame Others
Even if external factors contributed, focus on what you could have done differently. Blaming the market, competitors, or employees signals weak leadership.
Don't Come Without a Plan
Bad news without an action plan is just complaining. Always pair the problem with concrete steps you're taking to address it.
Don't Surprise Them in the Meeting
Pre-wire difficult topics. Board members finding out critical news for the first time in a meeting will react emotionally, not constructively.
Rebuilding Trust After Setbacks
If you've had to deliver significant bad news, rebuilding trust takes time and consistent follow-through.
Steps to Rebuild Trust
- 1Deliver on your action plan
Whatever you committed to, follow through. Report progress explicitly.
- 2Set conservative targets
After a miss, under-promise and over-deliver. Hitting a modest target beats missing an aggressive one.
- 3Increase communication frequency
More frequent investor updates show you're on top of things.
- 4Show self-awareness
Acknowledge what you learned and how you've changed your approach.
- 5Be patient
Trust is rebuilt through consistent execution over time, not a single good quarter.
Key Takeaways
- Never surprise your board—pre-wire difficult topics
- Use SBWB: Situation, Background, What We're Doing, Board Help
- Always pair bad news with concrete action plans
- Don't hide, spin, or blame others
- Rebuild trust through consistent execution over time
Navigating a Difficult Board Conversation?
Eagle Rock CFO helps founders prepare for tough conversations with their boards. We'll help you frame the narrative, build the materials, and develop an action plan that instills confidence.
Schedule a Consultation