How do you manage your startup's runway?

It is extremely important to categorize your spending and get granular data for analysis. All spends on travel, for example, should not just be categorized as "travel" expenses." They should also be tagged with customer related travel or marketing related travel such that we can track and cut expenses, if required. It will take just a little more discipline to add these tags while tracking the expenses. You do not need any sophisticated tools for the same. We are doing it in Google Sheets and Google Forms and it as simple as that.

This could be misleading. In many early stage startups, monthly revenue is not cash inflow. You may sign a contract worth $1000 but you won't get that money until next month, after you complete the deployment or receive signed off from customers. So burnrate should be looked at under worst case scenario: subtract your real IN cashflow from your monthly expenses.

Never rely on what you believe will be the outcome on your pro forma. I heard this from many people many times when I started my first business; "It will take twice as long and twice as much money". That may be an understatement. Don't rely on outside money. Prepare yourself to live in poverty. Focus on your product and revenue. Hustle.

I agree with Hoang, we have been going for nine years and whilst we have incredible clients, our time taken to get paid is currently almost at 70 days despite active credit control from our team. Cash flow is way more important.

Ability of differentiate fixed and variable cost make or break the burn control. 1 Lakhs of monthly budget is actually 12 Lakhs , you need to see the clearly as 1 Lakhs may look small but 12 may not be.

Understanding and diligently monitoring your burn rate is akin to a captain knowing the fuel levels of a ship: both are critical to survival and longevity. But let’s go a step further and consider the concept of “net burn,” which includes not just the money you’re spending but also the money you’re making. Keeping an eye on net burn provides a fuller picture of financial health, capturing revenue growth alongside expenses. It becomes not just a metric of sustainability but also of dynamism, offering nuanced insights that can guide you toward profitability rather than mere survival.

To extend your startup's runway while maintaining focus on your core product: Explore offering complementary products or services, licensing your technology, or targeting new customer segments. Leveraging strategic partnerships can provide resources, distribution channels, or additional funding without diluting your focus. Incentivize existing customers to purchase additional features, upgrades, or related products. Break down your roadmap into smaller, manageable iterations to release updates and improvements more frequently. Avoid unnecessary features that may divert resources and attention away from your main offering. Repurpose existing resources for additional revenue-generating activities within your core competencies.

Creating a 13 week cash flow and updating as often as possible is key. Building up cash reserves so that should something like a pandemic strike, is one of the most important things you can do. It is imperative to have at least three months worth of cash to cover expenses and most importantly staff salaries should things go awry....and they will. Over time building this up even more should be a goal.

For early stage startups, I would recommend to review cash balance every 2 weeks. Forget about Income statement or Balance sheet, cashflow is your life.

For pre or early revenue company cost is always additional of GST as you won’t able to take advantage of credit , you may end up sort of that additional gst if you didn’t take that into account

Cash flow is king; creating a revenue stream will ensure your money stretches further than anticipated. People often despise small ticket sales and prefer big ticket sales. If there are generous volumes to be sold with small ticket items, it is worth exploring a testing for viability. The nature of this sort of revenue is that once it picks up pace and you have a steady income, in tends not to dry up and sustains the bottom line of your company's finances. Maintain a financial buffer to handle unexpected expenses or downturns in revenue. This can help you weather unexpected challenges without jeopardizing your runway.

The point on maintaining a robust cash balance cannot be stressed enough, especially in an age where aggressive spending is often glorified. While ‘unicorn’ companies may have the luxury of vast reserves, most startups operate on far narrower margins. Ensuring a healthy cash balance not only offers a financial cushion but provides operational agility. Regular scrutiny of income statements, balance sheets, and cash flow forecasts is imperative, not optional. By doing so, startups are better equipped to navigate unforeseen challenges, secure additional funding, and most importantly, sustain the business.

In current landscape (as showcased over and over by Carta), 12 - 18 months of runway might not be enough (and in most case it won't). Why? Venture capital takes longer and longer to be raised successfully between rounds.

Having a clear runway projection is like having a roadmap through potential storms. It allows startups to strategize better, whether it’s about pulling in more revenue, cutting down on unnecessary expenses, or seeking additional funding. The focus here is on proactive planning rather than reactive scrambling. This, in turn, allows for the flexibility to seize new opportunities while being prepared for any challenges that may come your way. It’s not just about survival; it’s about thriving in the face of adversity.

Is your revenue just "monetization" of existing value proposition? If so, then by "increasing your revenue", you will slow down growth. This is a "confronting the brutal fact" moment for most start-ups since "the solve for x" tipping point here might be crucial between a win and a loss.

Revenue growth is the lifeblood of any startup, but it’s surprising how many overlook the nuances of it. Improving product features, marketing tactics, and sales approaches are the basics; the magic lies in how effectively these are executed. Upselling and cross-selling are not just revenue tactics but also ways to deepen customer engagement. And the idea of monetizing existing assets is a stroke of genius. It’s similar to having gold in your backyard and not knowing it; these latent resources could potentially open up new avenues for revenue that one hadn’t even considered. This multi-pronged approach ensures not just customer acquisition but also long-term business sustainability.

Scaling back expenses is an art and science many struggle with. It’s not just about cutting back but doing so intelligently. The concept of optimization is pivotal; automating tasks isn’t simply a tech upgrade, it’s a strategy to streamline operations. Negotiating with vendors and suppliers can lead not only to reduced expenses but possibly better terms that could benefit the business in the long run. Additionally, the idea of scrutinizing fixed costs like office space and tools is invaluable. This isn’t just an exercise in frugality; it’s a strategic move that could mean the difference between a sustainable operation and one that’s constantly on the brink. Smart cost management could very well be your silent partner in profitability.

More than increasing revenues (which is not easy in the initial years of operating a startup. Since you have to give discounts, offer free usage etc.), I think decreasing expenses is certainly the better strategy. This is from my personal experience running a bootstrapped startup: Here are four things we do: - Focus more on building automation than increasing headcounts (so this directly correlates with the man-hours one can save) - Continuously look for deals on your top expenses like AWS - Be 100% remote (if possible) - If at all you need a human to do the job, see if you can get a freelancer to do it rather than add a full-time employee

Business success isn't just about cutting costs; it's about balancing efficiency with sustainability. Reducing expenses and increasing productivity requires a meticulous approach, respecting both the environment and business ethics. Investing in smart technology and sustainable management practices not only cuts operational costs but also boosts team morale and attracts conscious consumers. Adopting eco-efficient strategies and fostering a collaborative and innovative work environment is the path to sustainable and responsible growth. #SustainableBusiness #Efficiency #Innovation"