Founders face unique financial challenges. We often have to bootstrap our businesses, using our own personal savings or taking out loans to fund our ventures. We may also have to forgo a salary for a period of time while we get our business off the ground. As a result, it is important for Founders to be mindful of their personal finances and to make sound financial decisions, even when money is rife for the business!
Some questions to ask yourself if you find yourself challenged by financial runway:
Are you tracking your burn rate?
This is the core metric. It reflects how quickly you're burning through cash. Knowing your burn rate allows you to forecast runway accurately.
Have you optimized spend?
Scrutinize your expenses. Look for areas to cut back without sacrificing quality or growth. Renegotiate contracts with vendors, explore cost-effective alternatives, and eliminate unnecessary expenditures.
Are you extending runway through revenue?
Focus on strategies to generate sales and grow your customer base. The sooner you bring in money, the longer your runway.
Are you raising capital efficiently?
Plan fundraising well in advance. Prepare a strong financial plan and pitch deck to secure investment and extend your runway.
Have you done scenario planning?
Don't just plan for one outcome. Consider different economic situations and how they might affect your runway. This allows you to be proactive and make adjustments as needed.
Having a strong financial plan, the right financial expertise, and a good grasp of where your business is at, can help Founders can mitigate financial risk.
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