Revisiting Guidance: Ten Considerations to Keep in Mind in Today’s Uncertain Environment

February 6, 2023
By Sheila Ennis

While opinions differ as to whether we are on the cusp of a recession, headed for the worst part of one, or experiencing a rolling recession, there’s no question that it’s even harder than usual to make financial projections. As a result, the management of many public companies are wondering (again) whether providing guidance is worth the trouble or if abandoning the practice would help foster a more long-term perspective. With or without company guidance, analysts will continue to make projections, and companies will continue to be dinged for missing those targets. Companies may question if there’s something to be gained from withdrawing or refraining from providing traditional top- and bottom-line guidance, limiting how far in advance they guide, changing the frequency with which they guide, or guiding on different KPIs. There are no easy answers, and every company’s situation is unique.


That said, as a general practice we continue to believe shying away from providing appropriate guidance is a lost opportunity to build credibility. The following are 10 considerations to keep in mind when determining whether and how to provide guidance in the current uncertain environment:


  • Guidance practices should be based on a clear understanding of what investors think about your industry as well as your ability to execute; use guidance to clarify misperceptions.
  • Think of guidance as an opportunity to demonstrate understanding and control of your business. Higher multiples will be assigned to those companies perceived to be in an attractive market; have a better, faster, and cheaper product; and have the ability to execute, even in uncertain times.
  • Multiples are just that, so seek a higher multiple on future earnings rather than putting targets out that no one believes are achievable in the short-term. Prioritize building credibility. Don’t forget quality of earnings and predictability of earnings both count to drive higher multiples.
  • Prioritize clarity over brevity in discussing guidance. Take the time to disclose key underlying assumptions and risks ranked in order, starting with largest impact. For example, does your guidance assume constant currency exchange rates or availability of key components at current prices? Provide this color in any investor interactions and not just in SEC filings.
  • Identify and distinguish swing factors you control and those you don’t. Talk about, or at least reassure investors, that you have prepared contingency plans for the latter. Articulate your priorities—e.g., positive cash flow generation—regardless of how many jobs we cut or maintaining customer relationships regardless of the cash burn.
  • Align internal and external communications when discussing the business outlook. Highlighting management’s uncertainty may greatly concern employees, customers and partners and exacerbate the problem of navigating in a volatile market. Care should be taken every quarter to engage directly with each audience and a higher frequency may be warranted in times of rapid change.
  • Share what you are seeing in terms of the health of your end markets. Articulate why your products or services are a must-have, not a nice-to-have, even in a recessionary environment.
  • Run annual benchmarking exercises to be sure you are reporting on and guiding to the expected KPIs for your industry and current size as well as the macroenvironment.
  • Ensure that your decision about whether to guide to next quarter, several quarters, full year, or several years matches up with what you can foresee at a point in time based on company-specific factors like contract duration, seasonality, competitive landscape, commoditization, and barriers to entry and exit.
  • Rather than using arbitrary “round number” guidance ranges, set ranges on guidance that are aligned with actual swings your business could experience and, again, tie underlying assumptions to both factors you control and those you don’t.


Periods of significant change in the macroeconomic outlook can provide companies with the opportunity to fine-tune guidance practices and/or articulate the rationale for their approach. As we enter a new year that promises to bring a very volatile market environment, it is worth considering whether your company’s current guidance habits are well suited to the current conditions or could use some rethinking.

Contact the author

Sheila Ennis
Managing Director